China's potential future growth and gains from trade policy bargaining: Some numerical simulation results |
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| Institution: | 1. Institute of World Economics and Politics, Chinese Academy of Social Sciences, Beijing, China;2. Central University of Finance and Economics, Beijing, China;3. Department of Economics, University of Western Ontario, Canada;4. Centre for International Governance Innovation (CIGI), Waterloo, Ontario, Canada;5. National Bureau of Economic Research (NBER), United States;6. University of International Business and Economics (UIBE), Beijing, China;1. Department of Finance, National Sun Yat-sen University, Kaohsiung, Taiwan;2. Department of Business Administration, National Kaohsiung University of Applied Sciences, Kaohsiung, Taiwan;3. Department of Money and Banking, National Chengchi University Taipei, Taiwan;1. Technische Universität Dresden, Germany;2. Nanjing Aeronautics and Astronautics University, China;3. University of Augsburg, Germany;4. Hong Kong Baptist University, Hong Kong;1. CRIEF, University of Poitiers, 2, Rue Jean Carbonnier, Bât. A1 BP 623, 86022 Poitiers, France;2. LEO, University of Orléans, Rue de Blois, 45067 Orléans, France;3. LaRGE, University of Strasbourg, 47 avenue de la Forêt Noire, 67082 Strasbourg, France |
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| Abstract: | Numerical simulation analysis of bargaining solutions is little developed in existing literature. In this paper, we use a numerical general equilibrium model which captures China and her major trading partners and examine the outcomes of trade policy bargaining solutions (bargaining over tariffs and financial transfers) over time, and then measure both absolute and relative gains to China from trade bargaining. These measurements are important for policy making. Our simulation results indicate that China's welfare gain from trade bargaining will increase over time if countries keep their present higher GDP growth rates for several decades, but there are major difference when using different bargaining solution concepts. These differences have not been noted in existing literature but have an intuitive explanation. Our results also indicate that if China jointly bargains along with India, Brazil and other developing countries with the OECD, and when we use PPP to adjust China's relative GDP size China's gain will further increase. |
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