Enhancing Tariff Shock Analysis in East and South Asia through Empirically Grounded Delayed Differential Equations

Pal, Hemendra (2025): Enhancing Tariff Shock Analysis in East and South Asia through Empirically Grounded Delayed Differential Equations.

Abstract

This research paper provides an empirical and regional extension to the original research paper, ”Comparative Asymptotic Analysis of Economic Modeling Frameworks Under Tariff Perturbations: Establishing the Superiority of Delayed Differential Equations.” The original work rigorously establishes the theoretical superiority of Delayed Differential Equations (DDEs) for modeling the macro-economic impacts of tariff shocks. This superiority stems from DDEs’ unique capacity to capture delayed feedback mechanisms, nonlinear adjustment dynamics, and inherent policy lags. Purpose– The primary objective is to guide the transformation of this theoretically sound, stylized DDE framework into an empirically robust model, specifically tailored for application to the diverse economic landscapes of East Asia and South Asia. Design/methodology/approach– The approach involves building upon the foundational DDE framework, which demonstrates superior capability in modeling nonlinear, lagged, and oscillatory features of policy shocks compared to traditional methods like Laplace Transforms, Ordinary Differential Equations (ODEs), and Partial Differential Equations (PDEs). A core strength is its dual-delay structure, reflecting both endogenous market inertia τ1 and exogenous policy implementation lags τ2. The methodology emphasizes integrating real-world data, country-specific policy contexts, and unique regional economic characteristics. Findings– The empirical research highlights the critical necessity of incorporating real world data, country-specific policy contexts, and unique regional economic characteristics to significantly enhance the model’s policy relevance and predictive accuracy. Originality/Value– The ultimate value lies in advancing regional economic forecasting capabilities and enabling the design of more resilient policies under complex, time-lagged economic conditions. This work provides a crucial step in moving from stylized theory to practical empirical application in a region of diverse economic landscapes.

• Item Type: MPRA Paper
• Language: English
• Keywords: Tariff shocks; Delayed differential equations; Policy lags; Economic modeling; Bifurcation analysis; Dual-delay dynamics
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C18 - Methodological Issues: General; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C52 - Model Evaluation, Validation, and Selection; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C54 - Quantitative Policy Modeling; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F47 - Forecasting and Simulation: Models and Applications; F - International Economics > F6 - Economic Impacts of Globalization > F62 - Macroeconomic Impacts; F - International Economics > F6 - Economic Impacts of Globalization > F68 - Policy

References

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