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Abstract
This paper examines how trade flows respond to liberalization shocks within a framework of recently implemented Armington-Krugman-Melitz Encompassing (AKME) module in the GTAP model. We follow the modeling strategy in Dixon and Rimmer (2012) and Oyamada (2013). We modify the comparative static GTAP model, which is a global CGE model widely used by researchers for quantifying policy impact. We redefine trade flow information stored in the benchmark GTAP Data Base, and implement a calibration procedure established in Oyamada (2013) and Oyamada (2014b). We run simulation of trade liberalization to draw a comparison between different trade specifications, decomposing the trade response in detail. Since there exits only a handful of attempts to compare the trade effects by examining the AKME module, we provide another results for further insights.