Calibrating a CGE model with NTBs that Incorporates Standard Models of Modern Trade Theory

We propose a way to incorporate NTBs for the four workhorse models of the modern trade literature in computable general equilibrium models (CGEs). CGE models feature intermediate linkages and thus allow us to study global value chains (GVCs). We show that the Ethier-Krugman monopolistic competition model, the Melitz firm heterogeneity model and the Eaton and Kortum model can be defined as an Armington model with generalized marginal costs, generalized trade costs and a demand externality. As already known in the literature in both the Ethier-Krugman model and the Melitz model generalized marginal costs are a function of the amount of factor input bundles. In the Melitz model generalized marginal costs are also a function of the price of the factor input bundles. Lower factor prices raise the number of firms that can enter the market profitably (extensive margin), reducing generalized marginal costs of a representative firm. For the same reason the Melitz model features a demand externality: in a larger market more firms can enter. We implement the different models in a CGE setting with multiple sectors, intermediate linkages, non-homothetic preferences and detailed data on trade costs. We find the largest welfare effects from trade cost reductions in the Melitz model. We also employ the Melitz model to mimic changes in Non tariff Barriers (NTBs) with a fixed cost-character by analysing the effect of changes in fixed trade costs. While we work here with a model calibrated to the GTAP database, the methods developed can also be applied to CGE models based on the WIOD database.

Non-tariff barriers, integration and the transatlantic economy

We examine the potential impact of TTIP through trade-cost reductions, applying a mix of econometric and computational methods to develop estimates of the benefits (and costs) for the EU, United States, and third countries. Econometric results point to an approximate 80% growth in bilateral trade with an ambitious trade agreement. However, at the same time, computable general equilibrium (CGE) estimates highlight distributional impacts across countries and factors not evident from econometrics alone. Translated through our CGE framework, while bilateral trade increases roughly 80%, there is a fall of about 2.5% in trade with the rest of the world in our central case. The estimated gains in annual consumption range between 1% and 2.25% for the United States and EU, respectively. A purely discriminatory agreement would harm most countries outside the agreement, while the direction of third-country effects hinges critically on whether NTB reductions end up being discriminatory or not. Within the United States and EU, while labour gains across skill categories, the impact on farmers is mixed.

A Foraging Cost of Migration for a Partially Migratory Cyprinid Fish

Migration has evolved as a strategy to maximise individual fitness in response to seasonally changing ecological and environmental conditions. However, migration can also incur costs, and quantifying these costs can provide important clues to the ultimate ecological forces that underpin migratory behaviour. A key emerging model to explain migration in many systems posits that migration is driven by seasonal changes to a predation/growth potential (p/g) trade-off that a wide range of animals face. In this study we assess a key assumption of this model for a common cyprinid partial migrant, the roach Rutilus rutilus, which migrates from shallow lakes to streams during winter. By sampling fish from stream and lake habitats in the autumn and spring and measuring their stomach fullness and diet composition, we tested if migrating roach pay a cost of reduced foraging when migrating. Resident fish had fuller stomachs containing more high quality prey items than migrant fish. Hence, we document a feeding cost to migration in roach, which adds additional support for the validity of the p/g model of migration in freshwater systems.

Prehistoric genomes reveal the genetic foundation and cost of horse domestication

The domestication of the horse revolutionized warfare, trade, and the exchange of people and ideas. This at least 5,500-y-long process, which ultimately transformed wild horses into the hundreds of breeds living today, is difficult to reconstruct from archeological data and modern genetics alone. We therefore sequenced two complete horse genomes, predating domestication by thousands of years, to characterize the genetic footprint of domestication. These ancient genomes reveal predomestic population structure and a significant fraction of genetic variation shared with the domestic breeds but absent from Przewalski’s horses. We find positive selection on genes involved in various aspects of locomotion, physiology, and cognition. Finally, we show that modern horse genomes contain an excess of deleterious mutations, likely representing the genetic cost of domestication.