This research report critically examines the fundamental weaknesses inherent in widely-used trade models. The authors present analytical arguments demonstrating that Computable General Equilibrium (CGE) models often rely on unrealistic macroeconomic assumptions, hindering accurate estimations of welfare gains from trade liberalization. The report advocates for simulation strategies that reveal a spectrum of potential outcomes, empowering policymakers to evaluate diverse scenarios.

This report is positioned as a critical academic analysis, likely appealing to economists and policymakers interested in the theoretical underpinnings and practical implications of trade liberalization models. The authors' focus on fundamental weaknesses and their call for more transparent simulation strategies suggest a contribution to ongoing debates within economic modeling. The work aims to equip readers with a more nuanced understanding of the limitations of current models and the potential range of outcomes associated with trade policy changes.