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Two common problems related to the use of the Armington aggregator in computable general equilibrium models

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  • Abdelhak Senhadji

Abstract

This note highlights two common problems with the application of the population CES aggregator introduced by Armington. Both are related to the dependence of the input shares on the elasticity of substitution even when relative prices are held constant. A modified CES aggregator is proposed which avoids these problems.

Suggested Citation

  • Abdelhak Senhadji, 1997. "Two common problems related to the use of the Armington aggregator in computable general equilibrium models," Applied Economics Letters, Taylor & Francis Journals, vol. 4(1), pages 23-25.
    • Handle: RePEc:taf:apeclt:v:4:y:1997:i:1:p:23-25
    DOI: 10.1080/758521826
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    References listed on IDEAS

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    1. Gali Jordi, 1994. "Monopolistic Competition, Business Cycles, and the Composition of Aggregate Demand," Journal of Economic Theory, Elsevier, vol. 63(1), pages 73-96, June.
    2. David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1992. "Relative Price Movements in Dynamic General Equilibrium Models of International Trade," NBER Working Papers 4243, National Bureau of Economic Research, Inc.
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    Cited by:

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    2. Alfred Stiassny & Christina Uhl, 2014. "Does Elderly Employment have an Impact on Youth Employment? A General Equilibrium Approach," Department of Economics Working Papers wuwp178, Vienna University of Economics and Business, Department of Economics.
    3. Jose Tongzon, 2001. "China's membership in the World Trade Organization (WTO) and the exports of the developing economies of East Asia: a computable general equilibrium approach," Applied Economics, Taylor & Francis Journals, vol. 33(15), pages 1943-1959.
    4. Maria Bejan, 2007. "Some Business Cycle Consequences of Trade Agreements:The Case of the North American Free Trade Agreement," RSCAS Working Papers 2007/03, European University Institute.
    5. Nigel Grimwade & David G. Mayes & Jiao Wang, 2011. "Estimating the Effects of Integration," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 13, Edward Elgar Publishing.
    6. Willenbockel, Dirk, 1999. "Dynamic applied general equilibrium trade policy analysis in the presence of foreign asset cross-ownership," Economic Modelling, Elsevier, vol. 16(3), pages 371-388, August.
    7. Jiao Wang & David G. Mayes & Guanghua Wan, 2005. "Income Distribution and Labour Movement in China After WTO Membership: a CGE Analysis," WIDER Working Paper Series RP2005-38, World Institute for Development Economic Research (UNU-WIDER).
    8. Miller, Andrew D. & Langley, Suchada V. & Chambers, William, 2003. "Current Issues Affecting Trade And Trade Policy: An Annotated Literature Review," Working Papers 14606, International Agricultural Trade Research Consortium.
    9. repec:zbw:bofitp:2005_018 is not listed on IDEAS
    10. Dirk Willenbockel, 1999. "On apparent problems with the use of the Armington aggregator in computable general equilibrium models," Applied Economics Letters, Taylor & Francis Journals, vol. 6(9), pages 589-591.
    11. Keigo Inukai & Yuta Shimodaira & Kohei Shiozawa, 2022. "Revisiting CES utility functions for distributional preferences: Do people face the equality–efficiency trade-off?," ISER Discussion Paper 1195, Institute of Social and Economic Research, Osaka University.
    12. Wang, Jiao & Mayes, David & Wan, Guanghua, 2005. "Effects of WTO membership on income distribution and labour movement in China : A CGE analysis," BOFIT Discussion Papers 18/2005, Bank of Finland, Institute for Economies in Transition.
    13. Jose L. Tongzon, 2002. "The Economies of Southeast Asia, Second Edition," Books, Edward Elgar Publishing, number 2029, December.
    14. Thöni, Christian, 2015. "A note on CES functions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 59(C), pages 85-87.

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