Bilateral multifactor CES general equilibrium with state-replicating Armington elasticities

Jiyoung Kim, Satoshi Nakano, Kazuhiko Nishimura

Research output: Contribution to journalArticlepeer-review

Abstract

We measure elasticity of substitution between foreign and domestic commodities by two-point calibration, such that the Armington aggregator can replicate the two temporally distant observations of market shares and prices. Along with the sectoral multifactor CES elasticities which we estimate by regression using a set of disaggregated linked input–output observations, we integrate domestic production of two countries, namely, Japan and the Republic of Korea, with bilateral trade models and construct a bilateral general equilibrium model. Finally, we make an assessment of a tariff elimination scheme between the two countries.

Original languageEnglish
Pages (from-to)431-452
Number of pages22
JournalAsia-Pacific Journal of Regional Science
Volume2
Issue number2
DOIs
Publication statusPublished - Aug 2018
Externally publishedYes

Keywords

  • Bilateral general equilibrium
  • Linked input–output tables
  • State-replicating elasticities
  • Two-point calibration

ASJC Scopus subject areas

  • Development
  • Urban Studies
  • Economics, Econometrics and Finance (miscellaneous)
  • Renewable Energy, Sustainability and the Environment

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