A Linked International Model for the Pacific Basin Economy

Abstract

This paper describes the structure, properties and use of a linked international model estimated from annual data. The structure of the model is designed to quantify the main macroeconomic relationships and the trade linkages among major industrial and industrializing economies, focusing on the Pacific basin economies. The model contains a separate equation block for each of the three developed countries (Japan, the US and Canada); the 12 EC countries as a group; the Asian NIES (Korea, Hong Kong and Taiwan) as a group; and the ASEAN countries(Indonesia, Malaysia, the Philippines, Singapore, and Thailand) as a group. These six equation blocks are linked together with each other through trade volume and trade price relationships. The sample period for the estimation of the model covers the years between 1975 up to 1987.

Article Note

This paper was presented at the Workshop on Econometric Models in Asia and the Pacific at the second Conventon of the East Asian Economic Asssociation which was held in Bandung, Indonesia, August 26–28 1990. I thank Mitsuo Yamada of Mie University for computational assistance.