Conclusions

Abstract

This book deals with the question of how useful existing trade elasticities are. For some economists, usefulness means being able to translate assumptions about future expenditures and relative prices into accurate projections for external imbalances. With such projections, one can anticipate the implications for economic performance and design alternative policy responses. Therefore, these practitioners favor a framework where predictive accuracy is of the essence, and they might, in choosing elasticities, be willing to put aside conflicts with theory for the sake of predictive accuracy.