This paper prepared by the Trade+ experts presents a general equilibrium model of the global economy that links economic growth to the developments in labor market, investments, research and development, and trade. It first outlines the model and further develops it in detail, incorporating all those elements into a unified, general equilibrium framework. The model is useful to evaluate how changes in trade costs, including transportation, policy, and institutional costs, impact the global equilibrium. By adding a more detailed description of an economy, it is possible to analyze how technological, demographic, and political shocks to that economy influence the long-term growth, trade, and welfare.

Read the full report prepared by the International Trade Research Center Trade+. 

The Center was established at the Kyiv School of Economics as a part of the “Promotion of a Supportive Framework for Trade in Ukraine” project, implemented through the German Federal Company Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, commissioned by the German Government.