Modelling Trade and Other Economic Interactions Between Countries in Baseline Projections

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Eddy Bekkers
Alessandro Antimiani
Caitlyn Carrico
Dorothee Flaig
Lionel Fontagne
Jean Foure
Joseph Francois
Ken Itakura
Zornitsa Kutlina-Dimitrova
William Powers
Bert Saveyn
Robert Teh
Frank Van Tongeren
Marinos Tsigas


This paper examines the way trade and other economic interactions between countries are modelled in the construction of baseline projections with recursive dynamic computable general equilibrium (CGE) models. Simulations are conducted on the size of trade elasticities, the way the trade balance is modelled (macroeconomic closure), trade growth, and energy prices. Other topics scrutinized are the modelling of zeros, modelling of new technologies and new types of trade policies (trade in data and digitalization), phasing in of future trade policies, and migration and remittances. We conclude that there is relative consensus about the use of nested Armington preferences, whereas different scholars model the trade balance very differently. The discrepancy between baseline trade growth and historical trade growth is not considered in most models though highly relevant. Research efforts, both in terms of modelling and data collection, should be allocated to a better coverage of other items on the current account (capital income, remittances) and the inclusion of net foreign debt and asset positions, projecting trade growth based on historical patterns, and better tools to model the rapidly growing digital economy.

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How to Cite
Bekkers, E., Antimiani, A., Carrico, C., Flaig, D., Fontagne, L., Foure, J., Francois, J., Itakura, K., Kutlina-Dimitrova, Z., Powers, W., Saveyn, B., Teh, R., Tongeren, F. V., & Tsigas, M. (2020). Modelling Trade and Other Economic Interactions Between Countries in Baseline Projections. Journal of Global Economic Analysis, 5(1), 273–345.
Advances in Methods and Theory