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Applied general equilibrium (AGE) models have received considerable attention and scrutiny in the public debate over the North American Free Trade Agreement (NAFTA). This collection brings together the leading AGE models that have been constructed to analyse NAFTA. A variety of approaches to modelling trade liberalization are taken in these studies, including multi-country and multi-sectoral models, models that focus on institutional features of particular sectors (agricultural, autos, steel, textiles and apparel) affecting multinational firms and rules of origin, and models with some inter-temporal structure. Further, by constructing stylized models, theoretical linkages have been identified that drive numerical results in the larger AGE models. The volume also assesses what can be learned about the likely economic effects of NAFTA from the collection of studies taken as a whole. Areas in need of further study have been highlighted.

Foreign trade policy --- North American Free Trade Agreement --- Canada. Treaties, etc. United States, 1988 Jan. 2 --- Free trade --- Equilibrium (Economics) --- Mathematical models. --- North America --- Mathematical models --- Business, Economy and Management --- Economics --- Free trade - North America - Mathematical models. --- Equilibrium (Economics) - Mathematical models. --- Free trade and protection --- Trade, Free --- Trade liberalization --- International trade --- NAFTA --- Accord de libre-échange nord-américain --- ALENA --- Acordo Norte-Americano de Livre Comércio --- Tratado de Libre Comercio --- T.L.C. --- TLC --- Tratado de Libre Comercio de América del Norte --- Tratado de Libre Comercio en América del Norte --- TLCAN --- Tratado de Libre Comercio de Norteamérica --- Tratado Trilateral de Libre Comercio --- TTLC --- Hokubei Jiyū Bōeki Kyōtei --- United States-Mexico-Canada Agreement

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Foreign trade. International trade --- United States of America

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The purpose of the paper is to measure the potential bias in the U.S. import price index due to the appearance of new product varieties, or new foreign suppliers, and determine the effect of this bias on the estimated income elasticity of import demand. Existing import price indexes are based on a sample of products from importing firms. We argue that if the share of import expenditure on the sampled products is falling over time, this will lead to an upward bias in the measured index. Using a correction based on the falling expenditure share on sampled countries, we find that the income elasticity of aggregate U.S. import demand is reduced from 2.5 to 1.7, or about halfway to unity. Our estimates suggest that the aggregate import price index is upward biased by about one and one-half percentage points annually.