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Bilateral multifactor CES general equilibrium with state-replicating Armington elasticities

Author

Listed:
  • Jiyoung Kim

    (Institute of Developing Economies)

  • Satoshi Nakano

    (The Japan Institute for Labour Policy and Training)

  • Kazuhiko Nishimura

    (Nihon Fukushi University)

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.

Suggested Citation

  • Jiyoung Kim & Satoshi Nakano & Kazuhiko Nishimura, 2018. "Bilateral multifactor CES general equilibrium with state-replicating Armington elasticities," Asia-Pacific Journal of Regional Science, Springer, vol. 2(2), pages 431-452, August.
    • Handle: RePEc:spr:apjors:v:2:y:2018:i:2:d:10.1007_s41685-017-0068-7
    DOI: 10.1007/s41685-017-0068-7
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    References listed on IDEAS

    as
    1. Mika Saito, 2004. "Armington elasticities in intermediate inputs trade: a problem in using multilateral trade data," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 1097-1117, November.
    2. Jiyoung Kim & Satoshi Nakano & Kazuhiko Nishimura, 2016. "Multifactor CES General Equilibrium: Models and Applications," Papers 1608.01365, arXiv.org, revised Jan 2017.
    3. John Kennan, 2001. "Uniqueness of Positive Fixed Points for Increasing Concave Functions on Rn: An Elementary Result," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(4), pages 893-899, October.
    4. Robert C. Feenstra & Philip Luck & Maurice Obstfeld & Katheryn N. Russ, 2018. "In Search of the Armington Elasticity," The Review of Economics and Statistics, MIT Press, vol. 100(1), pages 135-150, March.
    5. Shujiro Urata & Kozo Kiyota, 2003. "The Impacts of an East Asia FTA on Foreign Trade in East Asia," NBER Working Papers 10173, National Bureau of Economic Research, Inc.
    6. Tomoyoshi Nakajima, 2002. "An Analysis of the Economic Effects of Japan-Korea FTA: Sectoral Aspects," Discussion papers 0202e, ERINA - Economic Research Institute for Northeast Asia.
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    8. Tomoyoshi Nakajima, 2002. "日韓自由貿易協定の効果分析―部門別視点―," Discussion papers 0202, ERINA - Economic Research Institute for Northeast Asia.
    9. Kim, Jiyoung & Nakano, Satoshi & Nishimura, Kazuhiko, 2017. "Multifactor CES general equilibrium: Models and applications," Economic Modelling, Elsevier, vol. 63(C), pages 115-127.
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