1. the estimated � �� ? � ��� �� , and a chosen value for ?, solve the N system of equations (2) to derive the N values of � �� ? � �� . Substituting these � �� ? � �� , the estimated � �� ? � ��� �� , and the value of ? into equation (1), solve for the � �� ? � ��� ��;Using the initial bilateral trade-share matrix (?ij), a value for initial gross output in each country (Yi)
2. one has to account simultaneously for the trade-cost change � �� ? � ��� �� in computing the general equilibrium welfare change. Second, one needs initial values of gross output; GDP is unfortunately a "value added" measure of national output. As Head and Mayer (2014) note, although aggregate bilateral international trade flow data are readily available, only few data sets provide data on gross output, and usually for a small number of countries, short time series, and often just for limited sectors (e.g., manufacturing);Three important caveats are noted. First, in the case of reciprocal bilateral FTAs (such as most FTAs
3. The Effect of EEC and EFTA on European Trade: A Temporal CrossSection Analysis;N D Aitken;American Economic Review,1973