Discussion Paper
Improving the Analysis of Trade Policy
Rossbach, Jack; Kehoe, Timothy J.; Pujolas, Pau S. (2018-01-23)
The standard model that economists use to analyze the impact of trade reforms systematically underpredicts changes in trade patterns. It not only underestimates overall trade magnitudes, but also fails to predict which industries experience the largest trade increases. This failure results from not accounting for rapid growth in post-liberalization trade of the products that these industries produce. {{p}} This paper documents these weaknesses and demonstrates an alternative methodology. {{p}} Our modified model performs better because it accounts for the rapid growth of trade in products ...
Economic Policy Paper , Paper 18-1

Report
Using the new products margin to predict the industry-level impact of trade reform
Rossbach, Jack; Kehoe, Timothy J.; Ruhl, Kim J. (2013)
This paper develops a methodology for predicting the impact of trade liberalization on exports by industry (3-digit ISIC) based on the pre-liberalization distribution of exports by product (5-digit SITC). Using the results of Kehoe and Ruhl (2013) that much of the growth in trade after trade liberalization is in products that are traded very little or not at all, we predict that industries with a higher share of exports generated by least traded products will experience more growth. Using our methodology, we develop predictions for industry-level changes in trade for the United States and ...
Staff Report , Paper 492

Report
Quantitative Trade Models: Developments and Challenges
Rossbach, Jack; Kehoe, Timothy J.; Pujolas, Pau S. (2016-09-28)
Applied general equilibrium (AGE) models, which feature multiple countries or regions, multiple sectors, and input-output linkages across sectors in a Walrasian general equilibrium framework, have been the dominant tool for evaluating the impact of trade liberalization since the 1980s. We provide an overview of the historical development of AGE models and a guide as to how they are used to perform policy analysis. We then review and document shortcomings in the performance of AGE models in predicting the sectoral effects of past trade reforms, that is, we show that AGE models often perform ...
Staff Report , Paper 537