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The Use of Literature Based Elasticity Estimates in Calibrated Models of Trade-Wage Decompositions: A Calibmetric Approach

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  • Hui Huang
  • John Whalley

Abstract

How to best utilize the wide range of estimates of elasticities that characterize econometric literature when using calibrated models is the issue we address here through a blending of econometrics and calibration into calibmetrics. Econometrically generated literature based elasticity parameters are typically used in calibrated models a very simple manner, appealing to a single value. Here we explicitly incorporate the full range of values of elasticities yielded by econometric studies in both the calibration procedure employed and the uses made of a calibrated model. This is important because the ranges for such values can be large. This allows us to assess how uncertainty in exogenously specified parameter values affects the performance of calibrated models, and how much added information is obtained by using the full range of literature estimates of key parameters in calibration.

Suggested Citation

  • Hui Huang & John Whalley, 2004. "The Use of Literature Based Elasticity Estimates in Calibrated Models of Trade-Wage Decompositions: A Calibmetric Approach," DEGIT Conference Papers c009_007, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c009_007
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    References listed on IDEAS

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    1. Lars Peter Hansen & James J. Heckman, 1996. "The Empirical Foundations of Calibration," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 87-104, Winter.
    2. Finn E. Kydland & Edward C. Prescott, 1996. "The Computational Experiment: An Econometric Tool," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 69-85, Winter.
    3. Krugman, Paul R., 2000. "Technology, trade and factor prices," Journal of International Economics, Elsevier, vol. 50(1), pages 51-71, February.
    4. Matthew J. Slaughter, 1999. "Globalisation and Wages: A Tale of Two Perspectives," The World Economy, Wiley Blackwell, vol. 22(5), pages 609-629, July.
    5. Lisandro Abrego & John Whalley, 2002. "Decomposing Wage Inequality Change Using General Equilibrium Models," University of Western Ontario, Economic Policy Research Institute Working Papers 20022, University of Western Ontario, Economic Policy Research Institute.
    6. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, January.
    7. Dawkins, Christina & Srinivasan, T.N. & Whalley, John, 2001. "Calibration," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 58, pages 3653-3703, Elsevier.
    8. Lisandro Abrego & John Whalley, 1999. "The Choice of Structural Model in Trade-Wages Decompositions," NBER Working Papers 7312, National Bureau of Economic Research, Inc.
    9. Christopher A. Sims, 1996. "Macroeconomics and Methodology," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 105-120, Winter.
    10. repec:bla:reviec:v:8:y:2000:i:3:p:462-77 is not listed on IDEAS
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    Cited by:

    1. Elias Dinopoulos & Constantinos Syropoulos & Theofanis Tsoulouhas, 2023. "Global Innovation Contests," Games, MDPI, vol. 14(1), pages 1-24, February.

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    More about this item

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • F15 - International Economics - - Trade - - - Economic Integration
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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