Neutrality in the choice of number of firms or level of fixed costs in calibrating an Armington-Krugman-Melitz encompassing module for applied general equilibrium models
Data(s) |
08/04/2014
08/04/2014
01/03/2014
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Resumo |
This paper shows how an Armington-Krugman-Melitz encompassing module based on Dixon and Rimmer (2012) can be calibrated, and clarifies the choice of initial levels for two kinds of number of firms, or parameter values for two kinds of fixed costs, that enter a Melitz-type specification can be set freely to any preferred value, just as the cases we derive quantities from given value data assuming some of the initial prices to be unity. In consequence, only one kind of additional information, which is on the shape parameter related to productivity, just is required in order to incorporate Melitz-type monopolistic competition and heterogeneous firms into a standard applied general equilibrium model. To be a Krugman-type, nothing is needed. This enables model builders in applied economics to fully enjoy the featured properties of the theoretical models invented by Krugman (1980) and Melitz (2003) in practical policy simulations at low cost. |
Identificador |
IDE Discussion Paper. No. 465. 2014.3 http://hdl.handle.net/2344/1321 IDE Discussion Paper 465 |
Idioma(s) |
en eng |
Publicador |
Institute of Developing Economies, JETRO 日本貿易振興機構アジア経済研究所 |
Palavras-Chave | #Economics #Applied general equilibrium #Monopolistic competition #Firm heterogeneity #Calibration #Neutrality #331 #G World,others #C63 - Computational Techniques #C68 - Computable General Equilibrium Models #D58 - Computable Models #F12 - Models of Trade with Imperfect Competition and Scale Economies #L11 - Production, Pricing, and Market Structure; |
Tipo |
Working Paper Technical Report |