The US economy from 1992 to 1998: Results from a detailed CGE model

This paper describes historical and decomposition simulations undertaken for 1992-98 with a 500-sector computable general equilibrium model of the US. The historical simulation provides estimates Of movements in unobservable technology and preference variables. The decomposition simulation explains developments in the US economy in terms of movements in these variables and in observable exogenous variables such as tariffs. Both simulations produce many results. Here we use decomposition results to show that rapid growth in US international trade is explained mainly by technology changes that reduced costs in export-orientated industries and increased inputs of commodities that are heavily imported.