Introduction
John Gilbert, Department of Economics and Finance, Utah State University
Edward Tower, Department of Economics, Duke University
"Ed Tower and John Gilbert have made a truly notable contribution in this volume to numerical methods of analyzing trade issues. It is an invaluable supplement to the work of economists such as Robert Feenstra in this area. The authors must be congratulated on an important contribution that will be of great value to students and scholars alike."
Jagdish Bhagwati, University Professor of Economics and Law, Columbia University
"Trade economists have long taught 'Learning by Doing' models but John Gilbert and Edward Tower have now made 'Learning Trade Theory by Doing' possible. It is a book that both the students of trade theory and practitioners of computable general equilibrium models will find indispensable. The students will have fun learning the trade models while they become permanently imprinted in their memories. Practitioners of CGE models will understand better what goes on inside the black boxes of their models. Only a collaboration between an eminent trade theorist (Tower) and an accomplished analyst of numerical models (Gilbert) could have produced such a superb manual of learning trade theory and policy."
Arvind Panagariya, Professor of Economics and International and Public Affairs, Columbia University
The aim of this volume (published by World Scientific in 2013) is to help readers to develop the skills necessary to design, implement, and use numerical simulation models useful for trade and trade policy analysis. We start with simple models that are familiar from the pure theory of international trade, and gradually add complexity until we have systems that are representative of the current 'standard' CGE models.
The volume has several unique features: (1) The model development emphasizes the underlying optimization problems which define the various economic models and their component parts. Readers coming to the volume with a limited background in trade theory or computable general equilibrium will still find the approach accessible. (2) We emphasize using 'toy' models to develop programming skill and economic intuition. Readers coming to the volume with a strong background in trade theory will find the models and their properties to be very familiar, and can concentrate on learning how to translate the models into a numerical simulation form. Readers with less background in trade will develop skill in programming numerical models at the same time as learning more about the structure and behavior of the basic models of international trade theory. (3) The volume features a gradual development of the models, introducing new features in small, easily digestible parts. (4) We make all of the codes and models that are developed in the volume fully available. The reader is free to use the provided models as a base, and to modify them to suit their own purposes.
Contents:
1. Introduction
2. Getting Started with GAMS
3. Utility Maximization
4. Cost Minimization
5. Long-Run Production
6. Short-Run Production
7. Dual Approach
8. Transition
9. Higher Dimensions
10. Intermediate Inputs
11. Autarky
12. Small Country Trading Equilibrium
13. Non-traded Goods
14. Large Country Trading Equilibrium
15. Two Country Trading Equilibrium
16. Higher Dimensions and Trade
17. Reciprocal Dumping
18. Monopolistic Competition
19. Tariffs and Other Trade Interventions
20. Domestic Taxes and Subsidies
21. Factor Market Distortions
22. Multiple Households and Other Sources of Demand
23. Armington Preferences
24. Joint Production
25. Social Accounting Matrices
26. Closure
27. Single Country Competitive CGE
28. Concluding Comments
Appendix A. Lagrangian Multipliers, Shadow Prices and Marginal Social Values
Appendix B. GAMS Tips and Tricks