quantitative trade models · Julian Hinz

KITE

Julian Hinz — Fri, 09 Oct 2026 00:00:00 +0000

Open the KITE Lab → Shift a tariff and watch the world adjust: live results for 81 economies, computed in your browser.

KITE (Kiel Institute Trade Policy Evaluation) is an open-source framework for quantitative trade-policy counterfactuals. It implements general-equilibrium trade models in the New Quantitative Trade Model tradition and solves them in changes with exact hat algebra: given a baseline and a policy scenario (tariffs, non-tariff measures, carbon taxes), it returns the counterfactual changes in welfare, production, and trade flows.

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.

KITE has been used to evaluate trade agreements (e.g. NAFTA, TTIP), trade disputes (e.g. the US–China trade war) and economic sanctions. It derives the economic consequences for production, value added and welfare based on pre-defined scenarios that specify the policies to be evaluated.

A detailed description of the framework is available in the white paper “The KITE Model Suite: A Quantitative Framework for International Trade Analysis” (with Hendrik Mahlkow and Joschka Wanner, KITE White Paper, Kiel Institute for the World Economy, 2025).

Version 26.10 (“Brisk Fehmarn”, October 2026) ships three models:

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.
Hendrik Mahlkow and Joschka Wanner. 2023. “The Carbon Footprint of Global Trade Imbalances." CESifo Working Paper 10729. Carbon tax in a climate club with border carbon adjustment and export rebates, new in this release.

The full KITE suite comprises 13 models, available on request via kite@kielinstitut.de.

KITE is licensed under GPL-3. Documentation is at kite-model.org/r/.

Install from GitHub via the remotes package:


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

Navigating Shocks: The Ripple Effects of Shipping Route Closures

Carsten Philipp Brockhaus — Thu, 06 Aug 2026 00:00:00 +0000

Rerouting of global shipping under a Red Sea closure: traffic shifts from the Suez Canal to the Cape of Good Hope.

Who bears the cost when a maritime chokepoint is disrupted? Combining ship-level AIS trajectories, port-call logs, freight indices, customs data and Turkish shipment-level data, we document the trade effects of the 2023 Red Sea crisis: seaborne trade between affected country pairs fell, rerouted around the Cape of Good Hope, and recovered within months as freight costs surged, while some exporters shifted persistently toward air freight.

We build a quantitative trade model in which freight costs are endogenous to modal and route choice through congestion, a global shipping capacity constraint, and monopoly toll-setting by canal authorities. Calibrated to observed route choices and canal revenues, the model implies that a permanent Red Sea closure lowers global real income only mildly. Because the Suez Canal Authority, pricing to maximize revenue, already captures much of the route’s surplus, the loss falls on the toll collector: Egypt forgoes 3.0 percent of real income, almost all of it canal rent, while the large trading economies each lose less than 0.02 percent.

A transit fee on the Strait of Hormuz, a chokepoint without maritime substitutes, instead concentrates losses on the Gulf economies themselves. Whether a chokepoint has substitutes, and who prices it, jointly determine who pays for its disruption.

Brothers in arms: The value of coalitions in sanctions regimes

Sonali Chowdhry — Mon, 15 Apr 2024 00:00:00 +0000

Incurred and imposed welfare costs of the 2014 Russia sanctions.

This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition setups, we (i) dissect welfare losses for sanctions senders and target; (ii) compare prospective coalition partners; (iii) investigate “optimal” coalitions that maximise payoff from sanctions; (iv) provide bounds for sanctions potential, i.e. the maximum welfare change attainable when sanctions are scaled vertically up to an embargo, and horizontally up to a global regime. Relative to unilateral action, we find that coalitions magnify welfare losses imposed while their impact on domestic welfare loss incurred depends on the design and sectoral dimension of sanctions. Hypothetical cooperation of large developing economies such as China additionally raises the deterrent force of coalitions. Additionally, we quantify transfers that equalise welfare losses across coalition members to further demonstrate asymmetries in the relative economic burden of sanctions. In all scenarios, we implement a novel Bayesian bootstrap procedure that generates confidence bands for simulation outcomes.

Coalitions for Sanctions Heighten Costs for Russia but Burden of Implementation Should Be Shared among Member Countries

Sonali Chowdhry — Thu, 01 Feb 2024 00:00:00 +0000

Countries increasingly form alliances to collectively impose sanctions. However, the resulting impact of such coordination remains unclear. Analyzing the 2014 wave of sanctions against Russia over 400,000 simulations with a quantitative trade model, this report demonstrates that multilateral cooperation through coalitions simultaneously reduced domestic welfare losses incurred from sanctions and intensified welfare losses imposed on Russia. Results also reveal significant disparities within the coalition, with Russia sanctions placing relatively high economic costs on Baltic nations that can be mitigated through a burden-sharing program. Hypothetical cooperation by emerging economies like China is also shown to substantially raise the force of sanctions against Russia.

The research behind this report is Brothers in Arms: The Value of Coalitions in Sanctions Regimes.

Was wäre wenn? Die Auswirkungen einer harten Abkopplung von China auf die deutsche Wirtschaft

David Baqaee — Mon, 01 Jan 2024 00:00:00 +0000

Wie würde die deutsche Wirtschaft eine harte wirtschaftliche Abkopplung von China bewältigen? Um dem nachzugehen, simulieren die Autoren mithilfe eines quantitativen Handelsmodels ein Szenario, in dem sich die Weltwirtschaft in drei Blöcke aufspaltet: die G7-Staaten und ihre Verbündeten, China mit seinen Verbündeten sowie neutrale Länder. Der Handel Deutschlands mit China müsste komplett auf Länder des “westlichen” Blocks und neutrale Staaten umgeleitet werden. Die Kosten einer solchen worst-case harten Entkopplung quantifizieren die Autoren mit dem Multisektor-Modell der Weltwirtschaft von Baqaee und Farhi (2021). Die zentrale Erkenntnis der Autoren ist, dass ein vollständiger Abbruch der Handelsbeziehungen mit China schwerwiegende, aber nicht katastrophale Auswirkungen auf die deutsche Wirtschaft haben würde.

An English version is What if? The Effects of a Hard Decoupling from China on the German Economy.

Potential Economic Benefits of the African Continental Free Trade Area for Africa and the EU

Julian Hinz — Sat, 01 Jan 2022 00:00:00 +0000

Despite some growth, intra-African trade activity remains at low levels and falls far behind the levels of internal trade observed in more integrated regions like the EU. The European continent remains a major trading partner, but its share in total African exports and imports has decreased from nearly 50% to 35% between 2000 and 2020. Our simulations suggest that implementing the African Continental Free Trade Area (AfCFTA) agreement can lead to substantial welfare gains in Africa, but only if tariff reductions are accompanied by a significant lowering of Non-Tariff-Barriers (NTBs). If NTBs are reduced on a multilateral basis, the EU’s declining trade share with Africa might also be reversed. European governments and EU institutions should therefore have an incentive to provide technical and financial assistance — possibly within the framework of the existing WTO-led aid-for-trade initiative — to help AfCFTA economies lowering NTBs on a multilateral basis.