Botta, Alberto (2010): The Palestinian economy and its trade pattern: Stylised facts and alternative modelling strategies. Published in: The Palestinian economy: Theoretical and practical challenges (October 2010): pp. 194-231.
Download (474kB) | Preview
The World Bank (WB) Computational General Equilibrium model (CGE) by Claus Astrup and Sebastian Dessus (2001) is a cornerstone study on Palestine. It adopts a strictly neoclassical perspective, in which price-driven adjustments and the Armington/Constant-Elasticity-of-Transformation (CET) apparatus describe the functioning of the Palestinian economy and its foreign trade relations. This paper argues that certain empirical and factual inconsistencies prevent such a “pure” neoclassical approach from representing the Palestinian reality. We firstly argue that quantity-driven adjustments better describe economic adjustments within the Palestinian economy than price-driven adjustments do. Secondly, we stress the prevailing inter-industry nature of Palestinian foreign trade and the relevance of real income variables to explain expenditure allocation between domestic and imported goods. These aspects are hardly caught by the Armington/CET apparatus and require an alternative formalizing strategy. The final section of the paper describes a heterodox/structuralist perspective on Palestine.
|Item Type:||MPRA Paper|
|Original Title:||The Palestinian economy and its trade pattern: Stylised facts and alternative modelling strategies|
|English Title:||The Palestinian economy and its trade pattern: Stylised facts and alternative modelling strategies|
|Keywords:||Palestine, Foreign trade, Structuralist CGE models|
|Subjects:||C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models
F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade
B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B50 - General
|Depositing User:||alberto botta|
|Date Deposited:||22. Mar 2011 13:51|
|Last Modified:||12. Feb 2013 14:37|
Akkaya, S., N. Fiess, B. Kaminski, and R. Raballand. 2008. Economics of policy-induced rafgmentation: The cost to Ccosures regime to West Bank and Gaza. World Bank Middle East and North Africa, Working Paper no. 50.
Armington, P. 1969. A theory of demand for products distinguished by place of production. IMF Staff Papers 16: 159-76.
Arnon, A., I. Luski, A. Pivak, and J. Weinblatt. 1997. The Palestinian economy. Between imposed integration and voluntary separation. Leiden, New York and Koln: E.J. Brill Publishers.
Arnon, A., and J. Weinblatt. 2001. Sovereignty and economic development: The case of Israel and Palestine. The Economic Journal 111: F291-F308.
Astrup, C., and S. Dessus. 2001. Trade options for the Palestinian economy: Some orders of magnitude. World Bank Middle East and North Africa Working Paper Series, no. 21.
Astrup, C., and S. Dessus. 2005. Exporting oods or exporting labour? Long-term implications for the Palestinian economy. Review of Middle East Economics and Finance 3: 39-61.
Botta, A., and G. Vaggi. 2010. Palestine: A theoretical model of an investment-constrained economy. In The Palestinian economy: Theoretical and practical challenges, ed. M. Missaglia, F. Kattan, and G. Vaggi. Pavia: Pavia University Press.
Cimoli, M. 1994. Lock-in and specialization (dis)advantages in a structuralist growth model. In The dynamics of technology, trade and growth, ed. J. Fagerberg, N. von Tunzelman, and B. Verspagen., 123 – 144. London: Edwar Elgar.
Femise Network. 2006. Palestinian country profile: The road ahead for Palestine. Cairo, Egypt: The Economic Research Forum.
ICBS. 2009. Stastistical abstract of Israel. Jerusalem, Israel: Israeli Central Bureau of Statistics.
ICBS. 2010. National Accounts, 1995 – 2008. Jerusalem, Israel: Israeli Central Bureau of Statistics.
Gibson, B., and D.E. Van Seventer. 2000. A tale of two models: Comparing structuralist and neoclassical computable general equilibrium models for South Africa. International Review of Applied Economics 14: 149-171.
Kanafani, N. 2001. Trade – A catalyst for peace. The Economic Journal 111: F276-F290.
Kraev, E. 2003. Modelling macroeconomic and distributional impacts of stabilization and adjustment packages: Current literature and challenges. CEPA Working Paper Series 2003-06. New York: Centre for Economic Policy Analysis, New School University.
Lloyd, P.J., and X.G. Zhang. 2006. The Armington model. Australian government productivity commision Staff Working Paper.
Missaglia, M., and P. De Bour. 2004. Food-for-work versus Cash-for-work: Emergency assistance in Palestine. Economic Systems Research 16: 367-390.
Missaglia, M., and G. Valensisi. 2010. Reappraising the World Bank CGE model on Palestine. In The Palestinian economy: Theoretical and practical challenges, ed. M. Missaglia, F. Kattan, and G. Vaggi. Pavia: Pavia University Press.
Naastepad, C.W.M. 1999. The budget deficit and macroeconomic performance: A real-financial computable general equilibrium model for India. New Delhi: Oxford University Press.
PCBS. 1999-2008a. Foreign trade statistic series. Ramallah, Palestine: Palestinian Central Bureau of Statistics.
PCBS. 1999-2008b. Prices and price indices, Annual bulletin series. Ramallah, Palestine: Palestinian Central Bureau of Statistics.
PCBS. 2009a. National Accounts at current and constant Prices (2004 – 2007). Ramallah, Palestine: Palestinian Central Bureau of Statistics.
PCBS. 2009b. Labour force survey 2008. Ramallah, Palestine: Palestinian Central Bureau of Statistics.
Peres Centre for Peace, and PALTRADE. 2006. The untapped potential - Palestinian – Israeli economic relations: Policy options and recommendations. Tel Aviv, Israel: Peres Centre for Peace.
Rattso, J., and R. Torvik, R. 1998. Short-run consequences of trade liberalization: A computable general equilibrium model for Zimbabwe. Journal of Policy Modelling 20: 305-333.
Taylor, L. 1983. Structuralist macroeconomics: Applicable models for the Third World. New York: Basic Books.
Taylor, L. 1991. Structuralist CGE models. In Socially relevant policy analysis, ed. L. Taylor. Cambridge (MA): MIT Press.
Taylor, L. 2004. Restructuring macroeconomics: Structuralist proposals and critiques of the mainstream. Cambridge (MA) and London (UK): Harvard University Press.
Taylor, L., and R. Von Armin. 2007. Modelling the impact of trade liberalization: A critique of computable general equilibrium models. London: Oxfam Publishing.
UNCTAD. 2006. The Palestinian war-torn economy: Aid, development, and state formation. New York and Geneva: United Nations Press.
UNCTAD. 2009. Policy alternatives for sustained Palestinian development and capital formation. New York and Geneva: United Nations Press.
Winters, A. 1984. Separability and the Specification of Foreign Trade Functions. Journal of International Economics 17: 239-263.
World Bank. 2004. Four-years Intifada, closures and Palestinian economic crisis: An assessment. The World Bank Report, no. 32995.
World Bank. 2007. West Bank and Gaza investment climate assessment: Unlocking the potential of the private Sector. The World Bank Report, no. 39109.