Hertel, Thomas – Hummels, David – Ivanic, Maros – Keeney, Roman, 2007. «To what extent can we be confident from CGE-based assessments of free trade agreements?», Economic Modelling, Elsevier, 24(4), pages 611-635, July. The courtesy of computable general equilibrium models, widely used for the analysis of free trade agreements, is often criticized for having poor econometric bases. This paper improves the link between econometric estimates of important parameters and their use in the CGE analysis to better assess the likely outcome of a U.S. Free Trade Area (FTAA). Our econometric work focuses on estimating a particular parameter, the elasticity of substitution between imports from different countries, which we see as central to our assessment of the normative impact of the ESTV. We adapt the data in the econometric exercise to the above policy experience and use both the point estimates and the standard errors associated with it in our ESTV analysis, which explicitly takes into account the degree of uncertainty in the underlying parameters. In particular, we are drawn from the distribution of parametric values indicated by our econometric estimates to generate a distribution of the results of the model from which we can build confidence intervals. We find that imports are increasing in all regions of the world as a result of the free trade agreement, and this result is robust in relation to fluctuations in trade elasticities.

Nine of the thirteen free trade regions are experiencing a well-being gain in which we are more than 95% confident. We conclude that there is great potential for combining econometric work and policy analysis based on the EMB, in order to achieve a number of results that should be more satisfactory for demanding policy makers. Purdue University – Institute of Economics; National Bureau of Economic Research (NBER) If you have written this article and are not yet registered with RePEc, we advise you to do so here. This way, you can link your profile to this item. It also allows you to accept possible quotes on this article of which we are not sure. If CitEc has recognized a reference but has not linked an element of RePEc to it, you can use this form to help you. 1050 Massachusetts AvenueCambridge, MA 02138 USA 41 pages Published: May 23, 2004 Last updated: August 19, 2010 . Please note that it may take several weeks for the corrections to filter out the various RePEc services.

. Department of Agricultural Economics1145 Krannert BuildingWest Lafayette, IN 47907-1145 United States765-494-4199 (Telephone)765-494-9176 (Fax) World Bank; World Bank – Development Economics Group (DEC); World Bank – Development Research Group (DECRG) Hummels is Associate Professor of Economics at De Purdue University, West Lafayette, IN 47907-1145. If you know the missing items that are using them, you can help us create those links by adding the corresponding references in the same way as above for each reference item. If you are a registered author of this article, you can also check the «Quotes» tab in your RePEc Author service profile, as some quotes may wait for confirmation. Hertel is Distinguished Professor and Executive Director of the Center for Global Trade Analysis at Purdue University, West Lafayette, IN 47907-1145.