1. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

3. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

4. Introduction International Trade & the World Economy;  Charles van Marrewijk Léon Walras (1834-1910)

5. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

6. Demand International Trade & the World Economy;  Charles van Marrewijk As a result of demand bias country A imports manufactures despite being capital abundant

7. Demand International Trade & the World Economy;  Charles van Marrewijk Linder hypothesis Producers manufacture goods to satisfy local needs (similarity in income implies similar needs, implies more trade between similar countries). Armington assumption Each country or region produces a unique product (separately listed in utility function, implies separate demand function).

8. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

9. Partial equilibrium models International Trade & the World Economy;  Charles van Marrewijk

10. Partial equilibrium models Example: estimated costs of US steel protection, million US $; source: Francois and Hall (1997)

11. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

12. General equilibrium models International Trade & the World Economy;  Charles van Marrewijk Applied General Equilibrium (AGE) trade policy models distinguish between more (groups of) countries and sectors take simultaneous effects of proposed policy measures into consideration frequently use Constant Elasticity of Transformation (CET) ppf various ways of modeling factor markets frequently use Armington-type assumption countries not explicitly modeled captured with ad hoc assumptions 1 st generation: static, perfect competition, CRS; 2 nd generation: static, imperfect competition, IRS; 3 rd generation: dynamic models

13. General equilibrium models International Trade & the World Economy;  Charles van Marrewijk Example: impact of Uruguay Round, GDP quantity index (% change); Source: Francois, McDonald and Nordstrom (1997)

14. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

15. Measuring what is not there: the Dupuit triangle International Trade & the World Economy;  Charles van Marrewijk

16. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

17. More on the dynamic costs of trade restrictions International Trade & the World Economy;  Charles van Marrewijk

18. More on the dynamic costs of trade restrictions International Trade & the World Economy;  Charles van Marrewijk

19. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

20. China, a case study International Trade & the World Economy;  Charles van Marrewijk China GDP/capita as a percentage of world GDP per capita

21. China, a case study International Trade & the World Economy;  Charles van Marrewijk China; capital inflows, net FDI (% of GDP)

22. Introduction Demand Partial equilibrium models General equilibrium models Measuring what is not there: the Dupuit triangle More on the dynamic costs of trade restrictions China, a case study Conclusions CHAPTER 17; APPLIED TRADE POLICY International Trade & the World Economy;  Charles van Marrewijk

23. Conclusions International Trade & the World Economy;  Charles van Marrewijk Applied trade policy uses model structure determined by current data with detailed policy orientation analyzing non-local changes. For questions limited in scope: applied partial equilibrium (Harberger triangles). More ambitious questions: AGE models; (i) CRS and perfect competition, (ii) IRS and imperfect competition, (iii) dynamic. International contacts (trade, fdi, etc.) spread ideas, new goods and services, etc. Barriers to trade limit the spread of ideas, thus leading to products not introduced; potential dynamic costs are large, as measured by the Dupuit triangles.