Estimates of Armington parameters for a landlocked economy

Nganou, Jean-Pascal (2005): Estimates of Armington parameters for a landlocked economy.

Abstract

One of the most debated issues in the Computable General Equilibrium (CGE) literature concerns the validity of the key behavioral parameters used in the calibration process. CGE modelers seldom estimate those parameters, preferring to borrow from the handful of estimates available in the literature. The lack of data is often cited as a reason for this type of modus operandi (technique). Estimating key parameters is very crucial since CGE results are quite sensitive to parameter specification. This paper proposes a new and robust econometric technique, the Generalized Maximum Entropy (GME), to estimate Armington elasticities for selected commodities. All the parameters estimated are intended for use in a Lesotho CGE model.

• Item Type: MPRA Paper
• Language: English
• Keywords: CGE; Maximum Entropy (GME); Armington; Africa; Lesotho
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C14 - Semiparametric and Nonparametric Methods: General; C - Mathematical and Quantitative Methods > C0 - General > C01 - Econometrics

References

Arndt, Channing, Sherman Robinson, and Finn Tarp (2002) Parameter Estimation for a Computable General Equilibrium Model: A Maximum Entropy Approach, Economic Modelling 15, pp. 375–398.

de Janvry, A. and Elisabeth Sadoulet (2001) World Poverty and the Role of Agricultural Technology: Direct and Indirect Effects, Journal of Development Studies, pp.

Fraser, Iain (2000) An Application of Maximum Entropy Estimation: the Demand for Meat in the United Kingdom, Applied Economics 32, pp. 45–59.

Galloway, McDaniel, and Rivera (2000) Estimating a Demand System with Nonnegativity Constraints: Mexican Meat Demand, The Review of Economics and Statistics 1(83), pp. 541–550.

Golan, Amos, George Judge, and Douglas Miller (1996) Maximum Entropy Econometrics: Robust Estimation with Limited Data (Chichester, England).

Golan, Amos, Jeffrey M. Perloff, and Zhihua Shen (2001) Estimating a Demand System with Nonnegativity Constraints: Mexican Meat Demand, The Review of Economics and Statistics 1(83), pp. 541–550.

Judge, George G., R. Carter Hill, William E. Griffiths, Helmut Lutkepohl, and Tsoung-Chao Lee (1980) The Theory and Practice of Econometrics (New York, USA).

Liu, Jing, Channing Arndt, and Thomas Hertel (2001) Parameter Estimation and Measures of Fit in a Global, General Equilibrium Model, Conference Proceedings–Fourth Annual Conference on Global Economic Analysis.

Lofgren, H. (1994). A brief survey of elasticities for CGE models, Paper presented to the Ford Foundation. American University in Cairo, Cairo.

McDaniel, Christine A. and Edward J. Balistreri (2002) A Review of Armington Trade Substitution Elasticities, Mimeo, Research Division, Economics Office, U.S. International Trade Commission.

Mittelhammer, R. and N. S. Cardell (1997) On the Consistency and Asymptotic Normality of Dataconstrained GME Estimation in the GLM, Mimeo, Washington State University, Pullman, WA.

Mittelhammer, R.C., George G. Judge, and Douglas J. Miller (2000). Econometric Foundations (New York, USA).

Nganou, Jean-Pascal Nguessa (2005) A Multisectoral Analysis of Growth Prospects for Lesotho: SAM-Multiplier Decomposition and Computable General Equilibrium Perspectives. Ph.D. Thesis, American University, Washington, DC (US).

Shiells, Clinton R., Robert M. Stern, and Alan V. Deardoff (1986) Estimates of the Elasticities of Substitution between Imports and Home Goods for the United States, Weltwirtschaftliches- Archiv 122(3), 497–519.

Shiells, Clinton R. and Kenneth A. Reinert (1993) Armington Models and Terms-of-Trade Effects: Some Econometric Evidence for North America, Canadian Journal of Economics 26(2), 299–316.

Thurlow, James and Dick Ernst van Seventer (2002) A Standard Computable General Equilibrium Model for South Africa, Discussion Papers of the Trade and Macroeconomics Division, International Food Policy Research Institute (100), 1–71.