Tuesday, September 20, 2016

GAMS and Trump

A new study based on a course-grained CGE model on top of a fine-grained input-output model (written in GAMS) indicates that the trade policies proposed by presidential candidate Donald Trump could have substantial negative effects.

The principle of comparative advantages in trade was called by Paul Samuelson: an economic idea that is both universally true and not obvious. The not so intuitive part of this seems prevalent in the political discussions and on the campaign trail: most arguments are not  based on economics.

References
  1. Marcus Noland, Gary Clyde Hufbauer, Sherman Robinson, and Tyler Moran, “Assessing Trade Agendas in the US Presidential Campaign”, https://piie.com/system/files/documents/piieb16-6.pdf
  2. Donald J. Boudreaux, “Comparative Advantage”, The Concise Encyclopedia of Economics, http://www.econlib.org/library/Enc/ComparativeAdvantage.html
  3. Erwin Kalvelagen, “Solving Systems of Linear Equations with GAMS”, http://www.amsterdamoptimization.com/pdf/lineq.pdf. Has an example demonstrating some techniques relating to Input-Output analysis.