Price transmission
Time-series models estimate how much and how fast changes in world food and energy prices pass into domestic prices, allowing for exchange rates and policies.
GCRI · Trade and Strategic Resources
Econometrics for trade
Econometrics estimates relationships in trade and price data from observed history. In this field it measures how price shocks pass from world to local markets, how trade responds to policy measures, and how disruptions affect output and prices.
01Register
Econometrics for trade on the record.
Method recordSTEM method
- MethodEconometrics
- StewardEconomic Development
- Applied inTrade and Strategic Resources
- Data4 inputs
- Checks3 validation steps
- Canonical pageSTEM Commons
02Application
What econometrics does here.
Econometrics applies statistical methods to economic data to estimate relationships, test theories and forecast. It provides empirical evidence on how shocks and policies affect economic outcomes. In trade, resources and supply chains and industry and robotics, econometric evidence estimates how disasters, pandemics and financial shocks affect output, employment and prices. It informs the economic case for risk reduction. The canonical description is on the STEM Commons.
Effects of trade measures
Gravity models and difference-in-differences designs estimate how tariffs, export controls and sanctions change trade flows, including rerouting through third countries.
Disruption impacts on output
Event studies relate dated supply disruptions to changes in production and prices in the industries that depend on the disrupted input.
03Simulator
A shock through an input-output economy.
A loss of output in one sector propagates through the technical coefficients to its suppliers and customers, and recovers at the rate you set; the coefficients are teaching values, not national accounts. Teaching model with stated illustrative values, not a prediction.
Controls
- Sector hit first (position in the list)
- 0
- Size of the shock
- 30% of its output
- Duration of the shock
- 30 days
- Recovery rate
- 0.08 per day
- Days simulated
- 180 days
Readouts
- Output lost over the run
- 0.74% of a year’s output
- Total over direct (multiplier)
- 1.83 times
- Most affected other sector
- Energy
- Its peak inoperability
- 3.8%
Numbers, methods and sources
| Sector | Peak inoperability (%) | Output weight (%) |
|---|---|---|
| Agriculture | 31.04 | 17.0 |
| Energy | 3.79 | 8.5 |
| Manufacturing | 1.41 | 18.9 |
| Transport and ports | 2.46 | 20.1 |
| Trade | 0.32 | 18.1 |
| Services | 2.74 | 17.4 |
Methods
- Input-output analysis Leontief (1936); Miller and Blair (2009), Input-Output Analysis, Cambridge University Press
- Inoperability input-output model Haimes and Jiang (2001), Journal of Infrastructure Systems 7
- Dynamic inoperability and recovery Lian and Haimes (2006), Systems Engineering 9
- Uncertainty fan (parameter Monte Carlo) Spiegelhalter, Pearson and Short (2011), Visualising uncertainty about the future, Science 333
- One-at-a-time sensitivity (tornado) Saltelli and others (2008), Global Sensitivity Analysis: The Primer, Wiley
Data
The model runs on the teaching values set by the controls. To calibrate it for a place, read it against these admitted layers and series, which this page’s map can draw:
- Seaports Natural Earth
- Maritime chokepoints Nexus (named straits and canals at their published coordinates)
- Railways Natural Earth
- Major roads Natural Earth
Across the six pillars, led by Nexus Consortium
- Experiments Labs
- Built in Trade and Strategic Resources in Foundry
- Tested at Trade and Strategic Resources in Universe
- Codified in Industry, Trade and Supply Chains in Standards
- Published in Trade and Strategic Resources in Reports
- Taught in Faculty of Finance and Economics in Academy
04Data
What the method consumes.
Datasets and records used by econometrics on this platform, with the role each plays and the label its values carry. Sources are listed in the source register.
| Data | Role | Label |
|---|---|---|
| Trade flows | Outcomes | Published statistics |
| Price series | Transmission | Published statistics |
| Trade policy measure databases | Treatments | REPORTED |
| Industrial production | Impacts | Published statistics |
05Methods and evidence
How econometrics for trade is modelled, measured and tested.
The model, its assumptions, its data and its uncertainty, in the form a scientist or engineer would check. Structures follow published methods. The values drawn are illustrative, not findings.
System model
The couplings between the systems in econometrics for trade: signs of influence, a reinforcing and a balancing loop, and cross-links where stress jumps.
FAIR guiding principles · GO FAIR and FORCE11W3C PROV · World Wide Web ConsortiumGuidance on consistent treatment of uncertainties · IPCCCEOS Analysis Ready Data · Committee on Earth Observation Satellites
06Validation
How results are checked.
Models are assessed through specification tests, robustness checks and out-of-sample performance. Results are compared across datasets and methods.
| Check | How it is done |
|---|---|
| Pre-trend tests | Treated and comparison flows are checked for parallel trends before measures |
| Robustness to specification | Results are compared across model specifications |
| Structural break tests | Relationships are tested for change over time |
Endogeneity, measurement error and structural change can bias estimates. Relationships may shift under extreme conditions.
07Connections
Topics that rely on this method.
08Stewardship
Who maintains the method.
Economic Development stewards econometrics for the Consortium and reviews how it is applied across platforms.
09Connected
Where this page leads across the Consortium.
10Questions
Questions and answers.
What are the limits of econometrics in this field?
Endogeneity, measurement error and structural change can bias estimates. Relationships may shift under extreme conditions.
How are results checked?
Models are assessed through specification tests, robustness checks and out-of-sample performance. Results are compared across datasets and methods.
Are the values on this page real?
The data names, roles and checks are real descriptions of practice. The canvas shows a design of the method’s use, not a run; no result is reported here.
Where else is this method applied?
The canonical method page lists every platform that applies it.
ReportsContribute
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Reports is the Consortium’s quarterly publication. What you know about this subject can become evidence, a case or a correction in the next edition, credited to you and published under CC BY 4.0 where it is your own work.
GCRITrade and Strategic ResourcesStrategic SystemsScenario and Stress-Test
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