The Armington Model

A Productivity Commission Staff Working Paper, The Armington Model, by Peter Lloyd and Xiao-guang Zhang was released on 8 February 2006, in conjunction with an additional staff working paper, Armington Elasticities and Terms of Trade Effects in Global CGE Models. The paper explores how models adopting the Armington formulation differ from traditional models, in their quantitative properties and underlying theory of trade. In publishing its research in this area, the Commission hopes to clarify issues that arise as single-country and global trade models are increasingly used to assess the potential impacts of various types of trade liberalisation. The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.