KITE - Kiel Institute Trade Policy Evaluation

The KITE model provides a tool for simulating and estimating various types of (trade) policy changes. The underlying model uses a computable general equilibrium (CGE) framework of the type commonly described as a “New Quantitative Trade Model.” It is described in Chowdhry et al. (2024) and builds on Caliendo & Parro (2015), which is a multi-sector version of the Ricardian trade model of Eaton & Kortum (2002). In this framework, countries produce and sell both domestically and internationally according to their relative comparative advantage. The model extends this setup by incorporating extensive intra- and international input-output linkages, where goods and services can serve as both final and intermediate goods. Trade policy is modeled through changes in trade barriers, including tariffs and non-tariff measures.

The model has been widely used to evaluate (free) trade agreements (e.g., NAFTA, TTIP) and trade disputes (i.e. trade embargo), the US-China trade war, decoupling of value chains and economic sanction regimes (i.e. sanctions on Russia, NATO sanctions). It derives the economic consequences for production, value added, and welfare based on predefined scenarios that specify the policies to be evaluated. Various types of data sources can be integrated to construct the underlying model variables and parameters.

The model is continuously updated to improve efficiency and expand its framework. Current projects include the regionalization of the model for EU NUTS2 regions and the development of a product-level version.

KITE White Paper

^{Hinz, J., Mahlkow, H. and Wanner, J., 2025. The KITE Model Suite: A Quantitative Framework for International Trade Analysis.}