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Modelling Local Content Requirements: Quantitative Restrictions in a CGE Model

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  • Stone, Susan
  • Flaig, Dorothee
  • van Tongeren, Frank

Abstract

In this paper we describe the implementation of a new model structure to measure the impact of local content requirements. This is a novel approach to quantitative restrictions in trade model, implementing the policy behind-the-border. We show that local content requirements increase output and value added in the affected sector, but at the expense of other sectors, leading to declines in GDP and trade across the economy. We then compare this modelling approach to more traditional tariff equivalents and show the differences in outcomes to be significant.

Suggested Citation

  • Stone, Susan & Flaig, Dorothee & van Tongeren, Frank, 2014. "Modelling Local Content Requirements: Quantitative Restrictions in a CGE Model," Conference papers 332552, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332552
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    References listed on IDEAS

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    1. Rausch Sebastian & Metcalf Gilbert E. & Reilly John M & Paltsev Sergey, 2010. "Distributional Implications of Alternative U.S. Greenhouse Gas Control Measures," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(2), pages 1-46, July.
    2. N. W. Arnell & J. A. Lowe & S. Brown & S. N. Gosling & P. Gottschalk & J. Hinkel & B. Lloyd-Hughes & R. J. Nicholls & T. J. Osborn & T. M. Osborne & G. A. Rose & P. Smith & R. F. Warren, 2013. "A global assessment of the effects of climate policy on the impacts of climate change," Nature Climate Change, Nature, vol. 3(5), pages 512-519, May.
    3. Maximilian Auffhammer & V. Ramanathan & Jeffrey Vincent, 2012. "Climate change, the monsoon, and rice yield in India," Climatic Change, Springer, vol. 111(2), pages 411-424, March.
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