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N° 94-95 |
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| Issues 2-3 2003 |
| Regional Trading
Arrangements for Chile: do the Results Differ with a Dynamic Model? |
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Thomas F. Rutherford
David G. Tarr
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| Starting from our earlier
multi-region trade model, we develop two new 24 sector small open economy
(SOE) computable general equilibrium models (CGE) of Chile. One is comparative
static and the other is dynamic. We evaluate the impact of Chile forming
free trade agreements with either NAFTA or MERCOSUR. Our principal result
is that the dynamic SOE model does not produce welfare estimates significantly
different from the comparative static SOE model. Our second result is that,
although the difference is small, it is possible for a fully dynamic model
to produce welfare estimates for a preferential trade area that are welfare
inferior than those from a comparative static model. Finally, we develop
two classes of comparative steady-state models and show that it is necessary
to properly calibrate these models to the dynamic steady-state equilibrium
path in order to produce estimates that are not significantly biased relative
to the true dynamic estimates. |
Abstract |
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| Thematic
issue: "Agreements on Trade Liberalisation: Latin America and the Caribbean" |
Full
Text |
| Economic Integration;
Trade Forecasting and Simulation; Computable General Equilibrium Models;
Computable and Other Applied General Equilibrium Models |
Keywords |
| F15; F17; C68;
D58 |
JEL classification |
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Order form |
