So you want to build a trade model? Available resources and critical choices

Abstract

This paper reviews recent developments in trade theory, data, and modeling to provide guidance to researchers who are building and using trade models. Our findings show that trade models have fallen behind the latest development in theory, in part because data collection has not (and arguably will not) be able to keep pace with the needs of models built to incorporate the latest theories. The direction, much less the magnitude, of the errors made due to the limitations of today's trade models is uncertain, which should be a grave concern to modelers and the policymakers who rely on these models.