Putting Quantitative Models to the Test: An Application to Trump's Trade War / Rodrigo Adão, Arnaud Costinot, Dave Donaldson.

Format:

Book

Author/Creator:

Adão, Rodrigo.

Contributor:

National Bureau of Economic Research.

Costinot, Arnaud.

Donaldson, Dave.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31321.

NBER working paper series no. w31321

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

The primary motivation behind quantitative modeling in international trade and many other fields is to shed light on the economic consequences of policy changes. To help assess and potentially strengthen the credibility of such quantitative predictions we introduce an IV-based goodness-of-fit measure that provides the basis for testing causal predictions in arbitrary general-equilibrium environments as well as for estimating the average misspecification in these predictions. As an illustration of how to use our IV-based goodness-of-fit measure in practice, we revisit the welfare consequences of Trump's trade war predicted by Fajgelbaum, Goldberg, Kennedy and Khandelwal (2020).

Notes:

Print version record

June 2023.