Table Of ContentINTERNATIONAL TRADE
MODELLING
INTERNATIONAL STUDIES IN ECONOMIC MODELLING
Series Editor
Homa Motamen-Scobie
Executive Director
European Economics and Financial Centre
London
Economic Modelling in the OECD Countries
H. Motamen-Scobie
Modelling the Labour Market
M. Beenstock
Input-Output Analysis
M. Ciaschini
Models of Disequilibrium and Shortage in Centrally Planned Economies
C. Davis and W. Charemza
Economic Modelling at the Bank of England
S. G. B. Henry and K. D. Patterson
Recent Modelling Approaches in Applied Energy Economics
0. Bjerkholt, 0. 0lsen and ]. Vislie
International Commodity Market Models
0. Guvenen, W. C. Labys and ]. B. Lesourd
Dynamic Models for the Inter-relations of Real and Financial Growth
H. Ekstedt and L. Westberg
Economic Models of Trade Unions
P. Caronna, P. Mori and P. Tedeschi
International Energy Economics
Thomas Sterner
International Trade Modelling
M. G. Dagenais and P.-A. Muet
International Trade
Modelling
Edited by
M.G. Dagenais
Professor of Economics, University of Montreal,
Canada
and
P.-A. Muet
Professor of Economics, Ecole Polytechnique,
Paris, France
An Applied Econometrics Association Volume
Springer-Science+Business Media, B.V.
Firsr edition 1992 M. G. Dagenais and P.-A. Muet
© 1992 Springer Science+Business Media Dordrecht
Originally published by Chapman & Hali in 1992
ISBN 978-1-4757-2152-2 ISBN 978-1-4757-2150-8 (eBook)
DOI 10.1007/978-1-4757-2150-8
Apart from any fair deal ing for the purposes of research or private study,
or criticism or review, as permitted under the UK Copyright Designs and
Patents Act, 1988, this publication may not be reproduced, stoeed, or
transmitted, in any form or by any means, without tFIe prioe permission in
writing of the publishers, or in the case of reprographic reproduction only
in accordance with the terms of the licences issued by the Copyright Licensing
Agency in the UK, or in accordance with the terms of licences issued by the
appropriate Reproduction Rights Organization outside the UK. Enquiries
concerning reproduction outside the terms stated here should be sent to
the publishers at the London address printed on this page.
The publisher makes no representation, express or implied, with regard
ro the accuracy of the information contained in this book and cannot
accept any legal responsibility or liability for any errors or omissions that
may be made.
A catalogue record for chis book is available from che British Library
Library of Congress Cataloging-in-Publication Data
International trade modelling I edited by M. G. Dagenais and P.-A. Muet.
p. cm.-(International studies in economic modelling)
Includes bibliographical references and index.
1. International trade-Econometric models. 1. Dagenais, Marcel G.
II. Muet, Pierre Alain. III. Series.
HF1379.15843 1992 91-34278
382'.OI'5195-dc20 CIP
Contents
Contributors ix
Acknowledgements XI
Preface xiii
1 A decade of the new trade theory 1
P. Krugman
Part One Testing the New Trade Theory
2 Testing an imperfect competition trade model 13
M. R. Lynde
2.1 Introduction 13
2.2 The theoretical framework 16
2.3 Tests and estimates 19
3 Export behaviour with differentiated products: exports of Korea, 37
Taiwan and Japan to the US domestic market
J. Oliviera-Martins
3.1 Introduction 37
3.2 Stylized facts 38
3.3 The demand for differentiated goods 40
3.4 Empirical implementation 42
3.5 Estimation results 44
3.6 Discussion of the results 48
3.7 Summary 49
Part Two Price Discrimination and Exchange Rate Pass-Through
4 Exchange rates and import prices: evidence of pricing to market 55
in European car markets
J. Le Cacheux and L. Reichlin
4.1 Exchange rates and external adjustment 56
4.2 Law of one price versus segmented markets 57
4.3 Exchange rate pass-through 64
4.4 Conclusion 72
Contents
VI
5 Market structure, producer costs and location: an alternative view 77
of pricing in the European car market
A. Kirkman and N. Schueller
5.1 Theoretical model 78
5.2 Discussion 85
5.3 Empirical evidence 94
5.4 Conclusion 100
Part Three New Protectionism, Trade Liberalization in Perfect or
Imperfect Competition Models
6 Imperfect competition and the Japan-US automobile trade 107
J. Goto
6.1 Introduction 107
6.2 The basic model 108
6.3 Five sources of gains from international trade 113
6.4 Cost of trade barrier 118
6.5 Cost of Japanese VER 121
7 The welfare effects of voluntary export restraints on an exporting 129
country: a case of the non-rubber footwear industry
B. N. Jeon
7.1 Introduction 129
7.2 The cost of quantitative restrictions to exporting countries 130
7.3 The actual measurement of the cost of protection to the restricted 138
country by commodity
7.4 Non-rubber footwear 141
7.5 Summary and policy implications 154
Part Four Evaluation of Trade Protectionism with CGE Model
8 A decentralized multisector intertemporal general-equilibrium 161
evaluation of Brazil's protectionism
J. Mercenier, M. da Concei<,:ao and S. de Souza
8.1 Introduction 161
8.2 The model 164
8.3 Calibration procedure 172
8.4 Results 173
8.5 Conclusions 177
9 The effects of Japanese industrial policy on trade flows and 181
international competitiveness
H. Lee
9.1 Introduction 181
Contents vn
9.2 A general-equilibrium model of Japan 182
9.3 Solution procedure, parameter specification and calibration 187
9.4 Export promotion policy 188
9.5 Accelerated depreciation 190
9.6 The Japan Development Bank (]DB) loans 191
9.7 R & D policy 193
9.8 Conclusions 195
Part Five Comparative Advantages
10 The measurement of revealed comparative advantages 209
G. Lafay
10.1 The choice of comparative advantage indicator 209
10.2 Examples of the results obtained using CHELEM 220
Part Six Import Demand in Industrialized and Developing Countries
11 Error correction models for aggregate imports: the case of two small 237
and open economies
J.-P. Urbain
11.1 Introduction 237
11.2 Aggregate import demand function 237
11.3 The use of a relative price and the dynamic specification of 238
aggregate import function
11.4 The econometric methodology 239
11.5 Trend variables, spurious regressions, unit roots cointegration 240
11.6 Empirical results 245
11.7 Conclusions 260
12 Import demand in developing countries 279
R. Faini, L. Pritchett and F. Clavijo
12.1 Introduction 279
12.2 The theoretical framework 280
12.3 The traditional approach 282
12.4 The impact of foreign exchange availability 285
12.5 Modelling non-tariff barriers directly 288
12.6 Conclusions 290
Part Seven Disequilibrium Models of an Open Economy
13 A disequilibrium econometric model of the French economy with 301
two sectors and endogenous prices and investment
P. Artus, S. Avouyi-Dovi and J.-P. Laffargue
13.1 Introduction 302
Contents
Vlll
13.2 The model 302
13.3 The results 312
13.4 Economic policy, foreign shocks and the trade balance 316
13.5 Conclusion 321
14 Disequilibrium models and foreign trade: two approaches applied 323
to the French manufacturing sector
F. Amalric, A. Gubian and P. A. Muet
14.1 Introduction 323
14.2 Supply-demand disequilibria, inventory changes, and 324
foreign trade
14.3 Exports 339
14.4 Conclusion 344
Author index 347
Subject index 351
Contributors
1. F. Amalric OFCE, 69 quai d'Orsay, 75007 Paris
2. P. Artus Caisse des Depots et Consignations, 195 boulevard
Saint Germain, 75007, Paris
3. S. Avouyi-Dovi Caisse des Depots et Consignations, 195 boulevard
Saint Germain, 75007, Paris
4. F. Clavijo Coordinator de Assesores, Economicos
Contituyentes, 161-Sesto Piso, Col. San Miguel,
Chapultepec, Delegacion Miguel Hidalgo, 11850
Mexico, DF
5. R. Faini Universida da Brescia Economics Department Via
Fratelli, 21-25121 Porcellaga, ltalie
6. J. Goto Ministry of Labour, 1-2-2 Kasumigaseki,
Chiyoda-Ku,Tokyo 100, Japan
7. A. Gubian OFCE, 69 quai d'Orsay, 75007, Paris
8. B. N. Jeon Drexel University, Department of Economics,
Philadelphia, PA 19104, USA
9. A. Kirman European University Institute, Badia Fiesolana
Via Dei Roccettini, 50016 San Domenico di Fiesole
Florence, ltalie
10. P. Krugman Massachussets Institute of Technology, Department
of Economics, Cambridge, MA 02139, USA
11. G. Lafay CEPII, 8 rue Georges Pitard, 75014, Paris
