Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279234 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10484
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The primary motivation behind quantitative modeling in international trade and many other fields is to shed light on the economic consequences of policy changes. To help assess and potentially strengthen the credibility of such quantitative predictions we introduce an IV-based goodness-of-fit measure that provides the basis for testing causal predictions in arbitrary general-equilibrium environments as well as for estimating the average misspecification in these predictions. As an illustration of how to use our IV-based goodness-of-fit measure in practice, we revisit the welfare consequences of Trump's trade war predicted by Fajgelbaum et al. (2020).
Subjects: 
model testing and validation
computational general equilibrium
international trade
economic geography
JEL: 
C52
F10
R10
E17
C68
Document Type: 
Working Paper
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