KITE

The KITE model (Kiel Institute Trade Policy Evaluation) package provides a tool for simulating and estimating various types of (trade) policy changes. The underlying model is a New Quantitative Trade Model (NQTM).

The model has originally been developed by Caliendo & Parro (2015), building a multi-sector version of the Ricardian trade model of Eaton & Kortum (2002), where countries produce and sell domestically as well as internationally according to their relative comparative advantage. The model extends this framework by allowing for extensive intra- and international input-output linkages where goods and services may enter as both final and intermediate goods. Trade policy is conducted through the tightening or easing of trade barriers in form of tariffs and non-tariff measures.

The model has been extensively used to evaluate (free) trade agreements (e.g. NAFTA, TTIP) and trade disputes (i.e. US-China trade war, Airbus-Boeing case) and economic sanction regimes. It derives the economic consequences for production, value added and welfare based on pre-defined scenarios that specify the policies to be evaluated.

Version 24.01 allows the user to run different models within the same quantitative framework. Included models are:

• Caliendo, Lorenzo, and Fernando Parro. 2015. “Estimates of the Trade and Welfare Effects of NAFTA.” The Review of Economic Studies 82 (1): 1–44.

• Sonali Chowdhry, Julian Hinz, Katrin Kamin and Joschka Wanner. 2024. “Brothers in arms: The value of coalitions in sanctions regimes.” Economic Policy 39 (118): 471–512.

Install from GitHub via the remotes package:

install.packages("remotes")
remotes::install_github("https://github.com/julianhinz/KITE")

For more details and usage examples check out the KITE GitHub repository.

Related Research

• Brothers in arms: The value of coalitions in sanctions regimes
• Tariffs Hit Differently: The Regional Impact of US Tariffs across Europe and the Role of the Single Market