Dynamic Issues in Commercial Policy Analysis

Focuses on the explicit specification of dynamic mechanisms in the formal analytics of trade models. A wide range of modelling approaches is employed to investigate an even wider range of policy issues, with an overall objective of further extension of the basic conceptual framework of applied commercial policy analysis in the direction of dynamic issues and applications. Professors Baldwin and Francois and their contributors emphasis methods for the analysis of interactions between commercial policy and leading policy issues, including, investment performance, economic growth and innovation, the location of industry, migration, and the environment.

List of figures

xi

List of tables

xiv

Preface

xvii

List of conference participants

xviii

Introduction

1

(13)

Richard E. Baldwin

Joseph F. Francois

Jan I. Haaland

Neoclassical growth and trade

1

(6)

Endogenous growth and trade

7

(3)

Other dynamic issues

10

(4)

Transition dynamics and trade policy reform in developing countries

14

(30)

Joseph F. Francois

Hakan Nordstrom

Clinton R. Shiells

Introduction

14

(2)

Empirical studies of trade and growth

16

(10)

Trade reforms and steady-state effects

26

(2)

Policy reform and transitional effects

28

(8)

Concluding observations

36

(8)

Discussion

41

(3)

Richard E. Baldwin

Putting growth effects in computable equilibrium trade models

44

(45)

Richard E. Baldwin

Rikard Forslid

Introduction

44

(2)

Analytical considerations

46

(9)

Illustration of key trade and growth links

55

(13)

Practical considerations

68

(3)

The simulation model

71

(5)

Summary and concluding remarks

76

(13)

Appendix: Transitional dynamics with Tobin's q

77

(8)

Discussion

85

(4)

Christian Keuschnigg

Innovation, capital accumulation, and economic transition

89

(49)

Christian Keuschnigg

Wilhelm K. Kohler

Introduction

89

(4)

A growth model of the world economy

93

(9)

Long-run growth

102

(4)

Calibration to Western and CEEC countries

106

(2)

Transition path

108

(6)

The role of policy

114

(9)

Conclusions

123

(15)

Appendix A: More on calibration

125

(7)

Appendix B: Data sources

132

(6)

Multinational production, skilled labour, and real wages

138

(39)

James R. Markusen

Anthony J. Venables

Introduction

138

(3)

Model structure

141

(3)

Forces at work

144

(3)

Entry of multinationals as a result of investment liberalization: countries differ in relative endowments

147

(4)

Entry of multinationals as a result of investment liberalization: countries differ in size (absolute endowments)

151

(4)

The real wage of skilled labour

155

(2)

Trade costs

157

(3)

Comparative steady-state analysis

160

(7)

Conclusions

167

(10)

Discussion

173

(4)

Timothy J. Kehoe

Economic policy and the manufacturing base: hysteresis in location

177

(25)

Anthony J. Venables

Introduction

177

(2)

The model

179

(2)

One industry, two countries

181

(8)

Energy taxation in the chemical industry: a calibrated example

189

(4)

Cournot competition

193

(1)

Conclusions

194

(8)

Discussion

196

(6)

J. Peter Neary

Trade liberalization and investment in a multilateral framework

202

(26)

Joseph F. Francois

Bradley J. McDonald

Hakan Nordstrom

Introduction

202

(1)

Accumulation theory

203

(6)

A numerical example: the Uruguay Round

209

(11)

Conclusions

220

(8)

Appendix: A dual treatment of accumulation effects

221

(2)

Discussion

223

(5)

Ian Wooton

Investment creation and investment diversion: simulation analysis of the Single Market programme

228

(41)

Richard E. Baldwin

Rikard Forslid

Jan I. Haaland

Introduction

228

(1)

The prima facie case for investment diversion

229

(9)

An illustrative theoretical model

238

(7)

The simulation model

245

(6)

Results

251

(12)

Summary and concluding remarks

263

(6)

Discussion

266

(3)

Alasdair Smith

Blueprints, spillovers, and the dynamic gains from trade liberalization in a small open economy

269

(54)

Thomas F. Rutherford

David G. Tarr

Introduction

269

(3)

The model

272

(6)

Benchmark data and calibration

278

(4)

Model results

282

(41)

Appendix A: Modelling adjustment costs

304

(2)

Appendix B: Calibration of the IRTS submodel

306

(3)

Appendix C: Equilibrium conditions

309

(7)

Discussion

316

(7)

Ulrich Kohli

Trade policy and North--South migration

323

(22)

Joseph F. Francois

Doug Nelson

Introduction

323

(2)

Background

325

(3)

Theoretical considerations

328

(8)

Numerical simulations

336

(2)

Summary

338

(7)

Appendix: Migration and trade policy-numerical examples

339

(6)

Long-term modelling of trade and environmental linkages

345

(22)

John Beghin

David Roland-Holst

Dominique van der Mensbrugghe

Introduction

345

(2)

The basic model

347

(2)

Policy interventions for trade and pollution reform

349

(5)

An application to Indonesia

354

(4)

Conclusions

358

(9)

Appendix: A summary overview of the Indonesian model

360

(7)

Labour markets and dynamic comparative advantage

367

(12)

David Roland-Holst

Introduction

367

(1)

The basic model

368

(4)

An application to China

372

(4)

Conclusions and extensions

376

(3)

Index

379

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Dynamic Issues in Commercial Policy Analysis

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Table of Contents

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