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Department of Agricultural Economics, Purdue University
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The Global Trade Analysis Project (GTAP) Data Base: Version 12
This paper provides an overview of the Global Trade Analysis Project (GTAP) Data Base, version 12 (hereafter referred to as GTAP 12). This latest version distinguishes 145 countries and 18 aggregate regions for 7 reference years (2004, 2007, 2011, 2014, 2017, 2019, and 2023) and details the annual value of economic flows, within and between economies, across 65 goods and services sectors at pre- and post-tax valuation. Central to this database are the bilateral trade and international transportation margin flows that link all countries/ regions in the world. GTAP 12 also marks the first instance in which the land use and land cover (LULC) data, classified into 18 agro ecological zones (AEZs), are incorporated into the standard database construction process, thereby resulting in consistent land information across all GTAP databases. This, along with the greenhouse gas emissions satellite data, will greatly facilitate the use of the GTAP framework in economy-wide studies of trade and environmental issues at the global and regional levels.
Copyright (c) 2025 Angel Aguiar, Uris Baldos, Maksym Chepeliev, Erwin Corong, Thiago Simonato
Small-group monopolistic competition in a global computable general equilibrium model: Meeting the Markusen challenge
Since the 1990s, there have been rapid increases in concentration ratios in many industries in the U.S., Australia and, we suspect, in other countries. Despite this, applications of GTAP continue to be based on pure competition or Melitz-style Large-Group Monopolistic Competition (LGMC). In either case, all firms are small, there is free entry, and industries make zero pure profits. Markusen challenges modellers to move to Small-Group Monopolistic Competition (SGMC) in which industries have high levels of concentration and firms are aware of the likely behaviour of their rivals. By making two generalizations of Melitz-LGMC specifications, we create a version of GTAP in which some industries are modelled as SGMC. First, we treat the demand elasticities perceived by firms for their products as variables. In our SGMC specification, markups over marginal costs, which depend on perceived elasticities, rise when these elasticities are reduced (in absolute terms) by anti-competitive practices. Second, we allow for sticky adjustment of the number of firms in an industry and simulate situations in which entry is blocked or partially blocked, allowing incumbent firms to make positive pure profits. As illustrated in our simulations, the emergence of pure profits has the potential to suppress real wage rates.
Copyright (c) 2025 Peter Dixon, Maureen Rimmer
GTAPShape: A flexible approach to spatially disaggregating national land endowments for CGE modeling
This paper presents gtapshape, an R package that allows the user to flexibly disaggregate the national endowments used in the computational general equilibrium (CGE) models based on the GTAP-AEZ framework. By allowing the user to specify the set of subnational boundaries in the form of a shapefile, gtapshape allows for a richer understanding of how within-country heterogeneity impacts the results of CGE models. gtapshape’s modular strategy also allows for fast updating of the database as new sources of data become available. gtapshape is fully written in R and hosted in GitHub as free and open software. This should facilitate its incorporation into specialized workflows.
Copyright (c) 2025 Micah Cameron Harp, Nelson Villoria, Jayson Beckman
GlobeTERM, combining multi-country and sub-national detail
This paper describes a method of combining national Global Trade Analysis Project (GTAP) regions with sub-national detail. The approach extends the sub-national TERM methodology to create a family of models named GlobeTERM. In each model, the master database includes 74 sectors, based on GTAP with electricity split into 9 generation sectors plus a distribution sector. The other 64 sectors are those in GTAP Data Base version 11c. In most examples, one country within GTAP is split into sub-national regions, while retaining the other 159 GTAP regions in the master database. Examples include China, Germany, UK and USA. Another version represents Europe’s regions at the NUTS-2 level. Using the US version of GlobeTERM, an illustrative simulation examines the impacts of the imposition of large bilateral tariffs between USA and China. The aggregation for this scenario depicts swing states separately. While almost all US regions lose in the short run from the imposition of high bilateral tariffs, there are winning and losing states in the long run amid national losses.
In this work, I introduce a formulation of the GTAP version 7 model (Corong et al., 2017) in an open-source algebraic modeling language, JuMP (Lubin et al., 2023), implemented in Julia (Bezanson et al., 2017), that closely follows the specification of the model in GEMPACK (Horridge et al., 2019), including equation and variable names. Unlike the linearized GEMPACK version, my formulation is in levels. However, my formulation of the GTAP model is quite different from the levels formulation in GAMS (Bussieck and Meeraus, 2004) by Mensbrugghe (2018), in following more closely the variable and equation names of the GEMPACK model. I show that my model produces essentially the same results as the GEMPACK model. Because it is expressed in levels, with unabridged functional forms underpinning its behavioral equations (e.g., containing all parameters in the case of CES functions), my model can address a wider range of policy questions, especially those involving parameter changes. Calibrating the model to additional data, e.g., quantities, additionally allows it to be used in scenario analyses involving absolute productivity metrics. As an important benefit, my implementation of the GTAP model using open-source Ipopt solver (W¨achter and Biegler, 2006), requires no software license to solve the model.
GTAP-SIMPLE-G: Integrating Gridded Land Use, Crop Production and Environment Impacts into Global General Equilibrium Model of Trade
The integration between global and local economic systems has become an increasingly important research topic. This paper presents GTAP-SIMPLE-G, a general-equilibrium framework that extends the existing GTAP model by integrating a gridded partial equilibrium system detailing land use and crop production. This integrated framework links global demand and bilateral trade flows with local level crop supply and land use conversion, accounting for spillover effects across land-using sectors and subnational regions. The paper details the structure of GTAP-SIMPLE-G model, the development of a gridded database for one region in the model – namely Brazil, and the calibration of key parameters that govern the land use conversion and as well as the multi-crop production decisions. For illustrative purposes, GTAP-SIMPLE-G is applied to simulate the impacts of China's retaliatory tariffs on U.S. soybean exports on Brazilian crop production and land use at the local level. Findings show that the tariff shock causes not only an increase in Brazilian soybean production, but also highly heterogeneous responses in the production of other crops as well as land use in the wake of spatially varying multi-crop activities. Finally, this paper discusses the potential extensions of GTAP-SIMPLE-G for future studies and policy assessments on the Global-to-Local-to-Global linkages.
We present an innovative analytical framework that captures key mechanisms of international trade, and we demonstrate its usefulness as a tool for quantitative trade policy analysis. Our application relates to the tariff changes implemented by the United States in 2018 with subsequent retaliations by partner countries, particularly China. The framework is a multi-region multi-sector general equilibrium simulation model of the global economy. Our core contribution is to introduce a new trade structure that includes monopolistic competition among bilateral representative firms (BRF). We compare simulation results from the BRF structure to those from standard trade formulations of perfect and monopolistic competition. We find that the BRF structure leads to substantially larger trade and welfare changes induced by tariff shocks.
Copyright (c) 2025 Edward Balistreri, Christoph Boehringer, Thomas Rutherford
Creating a GTAP baseline for 2014 to 2050 using shock-intensive simulations
Shock-intensive simulations can be used to: update computable general equilibrium (CGE) databases; estimate trends in industry technologies and the preferences of households, governments and importers; and generate baselines that incorporate forecasts from organizations specializing in different aspects of economies. We demonstrate the shock-intensive methodology by applying it to the Global Trade Analysis Project (GTAP) model. We update a 2014 GTAP database to 2019 with data-driven shocks to an array of macro and energy variables and describe the simulated shifts in technologies and preferences. Then, starting from the updated database, we conduct baseline simulations for 2019 to 2030, 2030 to 2040 and 2040 to 2050 in which macro and energy variables are driven by forecasts from the International Monetary Fund (IMF), International Institute for Applied Systems Analysis (IIASA) and International Energy Agency (IEA). The simulations connect disjoint years (e.g. 2019 and 2030) and use a smooth-growth assumption for savings in each region to jump over intermediate years. Investors are given forward-looking expectations so that their simulated decisions in 2030, for example, are realistic in light of prospects for 2030 to 2040. Considerable space in the paper is devoted to explaining closure swaps for facilitating shock-intensive simulations.
Approximating Terms of Trade Effects in Single Country CGE Models
Single country computable general equilibrium (CGE) models often assume price taking behavior in world markets that may miss potentially important terms of trade effects in trade-exposed sectors. In this paper, we assess numerical evidence for modeling large open economies and develop a methodology for parameterizing a reduced form approximation of international trade linkages from a multi-regional global economy model. Simulated export demand and import supply elasticities suggest that assuming price taking behavior (e.g., small open economy assumption) may miss important impacts in export markets and some commodity import markets. We show that a reduced form approach to capturing terms of trade effects can perform well relative to an analogous multi-regional static model with explicit trade linkage. We also illustrate how the calibration procedure can be extended to a dynamic model using U.S. EPA’s SAGE model. Our modeling scenarios demonstrate the relative importance of the large open economy assumption in non-trade policy applications, which can be significant.
Copyright (c) 2024 Andrew Schreiber, Alex Marten, Ann Wolverton
SMART Handout: An Innovative Tool to Empower Applied General Equilibrium Teaching
Instructors of applied general equilibrium (AGE) courses usually face an important challenge: how to effectively and efficiently teach a large number of complex materials that are necessary for AGE analysis, including general equilibrium theory, producer and consumer theory, equational expression and model implementation. To overcome this challenge, in this paper we propose an innovative teaching tool, the SMART handout, which is a Wiki-style interactive handout that connects materials from AGE and several prerequisite courses and forms a knowledge network for easier cross-reference and deeper understanding. We take the Global Trade Analysis Project model as an example to demonstrate how a SMART handout is developed and applied in AGE teaching. This innovative tool can be generalized to other AGE courses, thereby contributing to building the capacity of future AGE researchers.
Copyright (c) 2024 Zhan Wang, Thomas Hertel
Endogenous Technological Change Adapted to the CGE Framework
We introduce endogenous technological change in a multi-sector recursive dynamic Computable General Equilibrium (CGE) model. We consider the optimization problem faced by technology firms in choosing the optimal level of R&D intensity given market conditions. R&D intensity determines the number of innovations and the speed of technological change in each sector. In addition, firms can choose the direction of technological change; for instance, when designing, they may opt for less energy-intensive but more capital-intensive production when the price of energy increases. We also differentiate between local innovations whose outcomes are constrained by the global technology frontier and innovations that transcend this frontier. The incorporation of endogenous technological change has a significant impact on policy simulations. Once it is considered, the model predicts that climate policy (in the form of a carbon tax) has a significantly larger impact on emissions in the long-run than in the short run. Finally, we demonstrate how intertemporal knowledge spillovers lead to path dependency. The introduction of a carbon tax at an early stage induces early low-carbon R&D and early know-how accumulation, which in turn leads to higher productivity in low-carbon sectors and lower long-run costs of decarbonization when compared to the scenario of postponed carbon tax.
Copyright (c) 2025 Jan Witajewski-Baltvilks
Introducing municipal solid waste streams in a CGE framework: A step in the direction of circular economy analysis
Growing population and per capita consumption are expected to generate about 3.4 billion tons of waste by 2050. The reuse and recycling of waste reduces the need for landfill, dumping, and incineration, and the extraction of virgin inputs. Such a transition impacts climate change, virgin material providers, producers and consumers. To quantify the direct and indirect impacts of this transition on the economy and environment, we extend a CGE model by developing a method and database including municipal solid waste streams. The waste stream constitutes of five types of municipal solid waste, three types of waste collection services and four types of waste treatment sectors that produce commodities to substitute those made by virgin materials. The model also tracks emissions caused by different waste treatment alternatives. The relationship between consumption, waste generation and waste treatment makes it possible to analyze circular economy policies. A baseline application shows that worldwide waste generation and collection is expected to grow by 45% between 2020-2050. Other waste is expected to grow the most by 53%; food waste is projected to grow the least at 35%. Therefore, without waste management policies, more waste will be incinerated or landfilled, which in turn aggravates climate change.
Copyright (c) 2024 Heleen Bartelings, Monika van den Bos-Verma, Hans van Meijl
Comments on “Estimation of the Value-Added/Intermediate Input Substitution Consistent with the GTAP Data"
The first part of the paper written by Ivanic et al. (2023) (hereafter IBN) offers new estimates of the substitution elasticities between inputs for many industries. IBN develop an original econometric framework that solely relies on the GTAP (Global Trade Analysis Project) databases, which lack data on input prices. IBN find, first, that the short run elasticities are often statistically different from zero and of the correct sign; second, that the long-run elasticities are larger than their short-run counterparts. Our comment identifies three concerns with their econometric procedures and results. First, IBN do not acknowledge the Constant Return to Scale (CRS) assumption of the Constant Elasticity of Substitution (CES) function. Second, IBN’s statistical inference fails to correct the p-value problems associated with large samples. Third, the dynamic specification developed by IBN, where decisions are a function of price changes and not price levels, lacks theoretical justifications. We propose simple remedies to these three issues and, in some cases, find that many elasticity estimates are no longer statistically different from zero or of the correct sign. Moreover, we do not find different levels of significance between short- and long-run elasticities.
Copyright (c) 2024 Alexandre Gohin, Obafemi Koutchade
A Ricardian Trade Structure in CGE: Modeling Eaton-Kortum Based Trade with GTAP
We develop an Eaton-Kortum based calibrated computational model, incorporating the basic structure of the GTAP version 7 model and database. The underlying trade and associated gravity equations are modified from a standard Armington structure with love of variety by country of origin to an Eaton-Kortum structure with comparative advantage differences within sectors. We describe the theory and model code changes necessary for implementation. We also link the underlying theory to the appropriate estimating equations for gravity estimation of the trade parameters. As an application, we then compare the simulation results derived from GTAP-type models with both Armington and Eaton-Kortum specifications. The impact of trade policy experiments on real income is very similar with marginal differences being driven by the transportation sector. The terms of trade impact of tariffs is not uniformly larger in Eaton-Kortum relative to the Armington specification. Finally, the impact of trade cost changes on the volume of trade is smaller in the Eaton-Kortum specification than in the Armington specification due to the identical-price-by-source-country property in the former.
Copyright (c) 2023 Eddy Bekkers, Erwin Lucban Corong, Joseph Francois, Hugo Rojas-Romagosa
This paper provides an overview of the GTAP-Power 11 Data Base, which covers 141 individual countries, 19 composite regions and 76 sectors, reporting data for five reference years – 2004, 2007, 2011, 2014 and 2017. The newly constructed database builds on the previous efforts, introducing several new features and updates. First, by extending the coverage across reference years, GTAP-Power 11 Data Base relies on the updated set of the levelized costs of electricity generation. Second, the database includes updates to the shares of transmission and distribution costs across countries. Finally, the newly constructed database includes complementary accounts of greenhouse gases and air pollutants. The GTAP-Power 11 Data Base is further used to explore the drivers behind changing emissions from electricity generation activity across countries and regions using the logarithmic mean Divisia index (LMDI) and decomposing the underlying drivers into activity, structure, and intensity effects.
Incorporating Theory-Consistent Endogenous Markups into Applied General-Equilibrium Models
The incorporation of increasing returns and imperfect competition into applied general-equilibrium (AGE) models, beginning with Harris (1984), led to much larger welfare effects from changes such as trade liberalization. But the imperfect competition side of these industrial organization (IO) developments has often failed to incorporate meaningful strategic behavior, largely ruling out firm-level productivity and scale effects. I show here that the incorporation of theory-based endogenous markups into AGE models is not difficult by employing the template of non-linear complementarity. I first derive the optimal markup equations for Nash Cournot and Nash Bertrand competition in a constant elasticity of substitution (CES) environment with free entry and exit. The first model is a simple closed-economy model where three alternatives are considered: large-group monopolistic competition (LGMC), small-group Cournot (SGC) and small-group Bertrand (SGB). Growth in the economy, a parable for trade liberalization among similar economies, is the experiment used to compare these specifications. The gains to initially small economies are much larger under either small-group assumption relative to LGMC, but diminish relative to LGMC as economies grow large. I also show how the contributions of variety (entry), firm scale (productivity), and markups (distortions) to welfare changes differ substantially among the three alternatives. The second model is a two-country trade model where the experiment is a reduction in trade costs using the SGB case and compares it to LGMC. A fall in trade costs increases firm scale, lowers markups and boosts welfare in spite of a fall in variety. Under LGMC, firm scale and markups are constant, but no fall in variety.
Calibrating Constant Elasticity of Substitution Technologies to Bottom-up Cost Estimates
We propose a method for calibrating an industry-level technology to engineering (bottom-up) estimates with a particular focus on abatement opportunities. As a demonstration, substitution elasticities across inputs are adjusted in the nested cost function for the electricity sector to best fit a target marginal abatement cost (MAC) curve derived from engineering assessments of available technologies. Elasticities are optimized over an entire relevant range of the MAC, whereas current techniques use local point estimates under little or no abatement. In the context of fitting to a given MAC we evaluate alternative nesting structures and find that, while complexity in nesting improves the fit, even relatively simple nesting structures can reasonably approximate the target MAC. In our example, focused on the electricity sector, we find standard elasticities adopted in top-down models moderately overstate abatement costs relative to the engineering targets. In our preferred specification the most important adjustment is to escalate the substitution elasticity between energy and value-added inputs. This is consistent with an argument that the current set of point estimates fail to properly account for new capital-based technologies. These conclusions, however, are sensitive to our assumption about output-intensity abatement and consumer price responsiveness, both of which are not delineated in engineering estimates.
Copyright (c) 2023 Edward Balistreri, Maxwell Brown
Estimation of the Value-Added/Intermediate Input Substitution Elasticities Consistent with the GTAP Data
Elasticities are often a combination of expert decisions and literature estimates—many of which are outdated. Recent efforts focus on estimating new estimates for some of the most commonly used elasticities (e.g., the Armington elasticity in models of trade); however, several elasticities still have little empirical basis. The elasticity of substitution between intermediate inputs and value-added is one example, but this elasticity is quite important as it governs producers’ production regimes across sectors and regions reflecting their level of efficiency. We examine and estimate this elasticity for one of the most widely used CGE models (parameter ESUBT in the Global Trade Analysis Project model), using the latest four datasets available (2007, 2011, 2014, and 2017). Our work finds that the default value of zero in GTAP does not reflect the true behavior implied by the data. Using our estimates, we propose a set of new values—for the short run (1-year), medium runs (3-4 years and 6-7 years) and long run (infinite horizon). We demonstrate the importance of our new estimates using a scenario from the EU Farm to Fork policy. We find that using the estimated elasticities leads to much milder market and welfare impacts; these effects are further dampened with the long-run elasticity estimates.
Copyright (c) 2023 Maros Ivanic, Jayson Beckman, Noe Nava
A Latin Hypercube Sampling Utility: with an application to an Integrated Assessment Model
This paper describes the use of a utility that creates a Latin Hypercube Sample (LHS). The LHS approach to sampling has had wide applicability as it represents a Monte Carlo strategy that limits sample size and therefore computer time to study the outcomes of simulations under uncertainty. Other approaches to deal with the ’size’ problem include Gaussian Quadrature (GQ) (Arndt, 1996), often used in the context of large models such as computable general equilibrium models. However, the GQ approach is most suitable for focusing on a small set of uncertain parameters as the number of model evaluations increases substantially with the number of uncertain parameters and/or the moments to track. The utility is a new version of the LHS utility that has been publicly available from Sandia National Labs since the early 2000s. Beyond the recoding from FORTRAN to C/C++, the new version of the utility has some additional features including new output options and additional statistical distributions. This paper demonstrates the use of the new utility by coupling it to an integrated assessment (IAM) model which is derived from the META 21 model developed by Dietz et al. (2021). The META 21 model has many components that can be readily integrated into global economic models that track greenhouse gas emissions—a simple climate module, economic impacts derived from sea-level and temperature rises and bio-physical tipping points such as the Amazon dieback. The IAM results suggest that the social cost of carbon increases by an average of around 26% when taking into account the tipping points and that the tipping points lead to an additional decline of 0-5% in per capita consumption in 2100 on top of the other damages related to climate change. The utility and the code to the IAM model are available as supplementary materials.
Copyright (c) 2023 Dominique van der Mensbrugghe
With the newly available R packages tabloToR and HARr, it is now possible to run GEMPACK models expressed in the TABLO language entirely in R without the need for a Fortran compiler, the GEMPACK software or any licenses. Working through a simple GTAP simulation, we demonstrate how the simulation may be done in R and show that its results are virtually identical to those obtained in GEMPACK. With tabloToR and HARr offering a working replacement for GEMPACK, the packages could benefit those CGE modelers who are more comfortable working in R than in GEMPACK, and bring about benefits to the CGE modeling community through additional efficiency, easier integration and new features.
The Global Trade Analysis Project (GTAP) Data Base: Version 11
This paper describes the construction of the GTAP Data Base, version 11. The database reconciles different data sources at a global scale for analytical use and provides time series data on value flows, volumes, and various tax instruments. GTAP version 11 has 5 reference years (2004, 2007, 2011, 2014, and 2017), distinguishes 65 sectors in each of 141 countries and 19 aggregate regions - with individual countries accounting for 99.1% of world GDP and 96.4% of world population. The exhaustive nature of GTAP in its country and sector coverage facilitates its use in economy-wide studies of global economic issues.
Copyright (c) 2022 Angel Aguiar, Maksym Chepeliev, Erwin Corong, Dominique van der Mensbrugghe
New Price-based Bilateral Ad-valorem Equivalent Estimates of Non-tariff Measures
As global applied tariffs continue to decline, and the stock of non-tariff measures continues to increase, applied international trade researchers increasingly seek to evaluate the effects of non-tariff measure (NTM) policies. This, however, requires their quantification – a non-trivial estimation task that needs to be undertaken at a disaggregated level. Estimation of ad-valorem-equivalents (AVEs) of NTMs is generally conducted using one of two approaches: price-based or quantity-based. This study uses a price-based approach to estimate AVEs at the Harmonised System (HS) six-digit level. Bilateral Global Trade Analysis Project (GTAP) sector-specific AVEs are obtained by aggregating the derived AVE estimates, using HS-GTAP sector concordance and HS six-digit level bilateral trade flows as weights. A key advantage of the price-based estimation method used in this study is that the AVEs can be directly used in the GTAP model, without the need to adjust them based on import-demand elasticities. Derived AVEs estimated in this study are also importer/partner-specific and rely on counts of NTMs rather than simply instances of NTMs. This paper provides GTAP-consistent estimates and aggregation code to facilitate custom GTAP aggregations of AVEs, as well as replicable, open source code that can be altered based on users' assumptions or particular research needs.
Copyright (c) 2022 Alexey Kravchenko, Anna Strutt, Chorthip Utoktham, Yann Duval
A general equilibrium model with an asymmetric Armington function: Method and application
In the modeling of imports, most CGE models use Armington functions with symmetric responses to increases and decreases in the ratio of prices of imports and domestic products. In this paper, we extend this by permitting asymmetric responses to changes in this price ratio. Specifically, we assume that it is easier to substitute imports for domestic products than vice versa. The rationale is that, in most contexts, the ability of the outside world to supply close substitutes for domestic products is stronger than the ability of domestic producers to supply close substitutes for imports. The paper presents the mathematical structure of an asymmetric Armington treatment and embeds it in a simple static CGE model based on a Mongolian dataset. The model is used to analyze how the impact of two external shocks - an increase in the foreign currency price of an import and the elimination of the current-account deficit - is influenced by whether a symmetric or asymmetric treatment is used for the Armington function; for the latter, the Armington elasticity is lowered if imports are reduced relative to domestic purchases. The application demonstrates that our asymmetric formulation is simple, robust and that, compared to the symmetric case, asymmetry may lead to important differences in the macro and sectoral impacts of import price shocks. Given this, the paper points to the need for econometric research that estimates Armington elasticities without imposing symmetry. If symmetry is rejected, then it would be important to switch to an asymmetric treatment like the one proposed in this paper.
Copyright (c) 2022 Martin Cicowiez, Hans Lofgren
Endogenous Capital Utilization in CGE Models: A Mongolian Application with the PEP-1-1 Model
This paper extends the PEP-1-1 model (a static computable general equilibrium, or CGE, model for small open economies) to incorporate variable capital utilization. It argues that CGE models with fixed sectoral capital may underestimate the impact of shocks in the short run by ignoring industries' adjustment of their capital utilization rate (or intensity of use) in response to changes in their economic environment. The model is calibrated to a 2014 Mongolian social accounting matrix. An increase in the export price of coal is considered as a shock for demonstration purposes. Compared to the standard PEP-1-1 model the impact of the shock is larger in the expanded model. In addition, the results of the PEP-1-1 model are derived as a special case of the model involving capital utilization.
Variable (endogenous) capital utilization
Copyright (c) 2022 Bernard Decaluwe, Ragchaasuren Galindev
Disaggregating Agro-Food Sectors in the GTAP Data Base
We discuss the construction of the GTAP-AGROFOOD database for CGE modelling which is consistent with the standard GTAP Data Base Version 10a (Aguiar et al. 2019). GTAP-AGROFOOD departs from the full detail of 141 regions, 65 products and 8 factors in GTAP, by introducing 51 additional agro-food products and sectors in lieu of 11 original GTAP agro-food products, thereby yielding a database with 105 products. Such additional detail can improve and enrich, for instance, analysis of trade, bio-economy or climate change mitigation or adaptation issues. It also eases linkage to other, more detailed data sets, such as for nutrition accounting or irrigation water use. The main data sources used are the FABIO Multi-Regional Input-Output Database (Bruckner et al. 2019) which reports on production, land, seed, feed, and food use, mainly for primary agricultural products, and market balances for dairy products from FAOSTAT. They are combined with TASTE V10a (Pelikan et al. 2020) which provides bilateral trade and tariffs revenues at the level of tariff lines. The balancing methodology which ensures consistency with the GTAP Data Base is based on the linear loss based split utility of CGEBox (Britz 2021).
Incorporating Nutritional Accounts to the GTAP Data Base
With a wide range of implications for welfare, food security, land use, trade and the environment, nutrition-related policies pose complex questions that should be assessed using an approach that properly accounts for all the involved interactions. Widely used partial equilibrium models fail to properly account for the post-farmgate food value chains. At the same time, most of the available integrated assessment and computable general equilibrium models have some major limitations in terms of the consistent representation of nutritional data flows. In this paper, we address some of the limitations identified in the literature and develop an approach for incorporating nutritional accounts into the Global Trade Analysis Project (GTAP) Data Base, tracing quantities of food, calories, fats, proteins and carbohydrates along the value chains. We further showcase how the developed nutritional database can be linked to the standard GTAP model. A sample application is developed in the paper to provide an assessment of the impact of import tariff elimination on nutritional flows.
GTAPinGAMS: Multiregional and Small Open Economy Models
This paper describes the implementation in the General Algebraic Modeling Language (GAMS) of an economic equilibrium model based on the Global Trade Analysis Project (GTAP) dataset. We call this model and the ancillary programming tools GTAPinGAMS. Relative to previous installments of GTAPinGAMS, an innovation in this model is that it can easily switch between global multiregional (GMR) and small open economy (SOE) closures. We also include the possibility to evaluate results for alternative representations of final demand, based on Cobb-Douglas, linear expenditure system or constant difference in elasticities demand systems. In this paper we outline the model structure, document the associated equilibrium conditions and describe computer programs which calibrate the model to the desired regional and sectoral aggregation from the GTAP 9 dataset. We perform a few calculations which illustrate how alternative structural assumptions influence the policy conclusions derived from the model.
Copyright (c) 2016 Thomas Fox Rutherford
Mathematics of Generalized Versions of the Melitz, Krugman and Armington Models with Detailed Derivations
We provide detailed textbook style mathematical derivations of an extended version of the heterogenous firms model of Melitz (2003), as well as the Armington (1969) and Krugman (1980) models. Our model of heterogeneous firms extends the model of Melitz (2003) by allowing multiple sectors, intermediates, heterogeneous regions based on data, labor-leisure choice, initial heterogeneous tariffs as well as iceberg trade costs, multiple factors of production, the possibility of sector-specific inputs and trade balances based on data, and we incorporate global and unilateral tariff policy shocks. Although the models in this paper are extensions in numerous directions of the Melitz trade model of heterogeneous firms, the pedagogical approach in this paper should substantially facilitate the accessibility of the applied heterogenous-firms model of international trade for students and reviewers. Balistreri and Tarr (2020) apply these models to GTAP data where they assess the relative welfare impacts in the Armington, Krugman and Melitz style models of trade cost reductions in eighteen model variants. This paper documents the equations of those models, and we hope it will be a clear roadmap for understanding and constructing modern multi-sector, multi-region international trade models that must be fitted to data.
Welfare Gains from the New Trade Theory;
Copyright (c) 2022 Edward J. Balistreri, David G Tarr
Finance in a global CGE model: the effects of financial decoupling between the U.S. and China
We add to the GTAP model a financial module built around an 18-region asset-liability matrix. A financial agent in each region takes account of expected rates of return in allocating the regions financial budget between domestic capital and financial assets in each other region. Using GTAP with the financial module in place, we simulate financial decoupling between the U.S. and China. The results show that the U.S. would gain by limiting its financial flows to China, leading to a redirection of finance to the domestic economy. This would stimulate investment in the U.S. with favorable effects on employment, capital stocks, real GDP, wealth, and real wage rates. At the same time investment in China would decline with negative effects on the Chinese economy. Similarly, China would gain by limiting its financial flows to the U.S. and the U.S. would lose. In a tit-for-tat situation in which each country reduces its financial asset holding in the other country by x per cent, the winner would be China. We conduct additional simulations to compare the effects of trade decoupling with those of financial decoupling.
Copyright (c) 2021 Peter Dixon, James Giesecke, Jason Nassios, Maureen Rimmer
Comparing Penalty Functions in Balancing and Dis-aggregating Social Accounting Matrices
Constructing a balanced and sufficiently detailed Social Accounting Matrix (SAM) is a necessary step for any work with Computable General Equilibrium (CGE) models. Even when starting with a given SAM, researchers might wish to develop their own, more detailed variants for a specific study by dis-aggregating sectors and products, a process termed splitting the SAM. We review three approaches for balancing and splitting a SAM: Cross-Entropy (CE), a Highest Posterior Density (HPD) estimator resulting in a quadratic loss penalty function, and a linear loss penalty function. The exercise considers upper and lower bounds on the (new) SAM entries, different weights for penalizing deviations from a priori information, and unknown row or column totals, to give the user flexibility in controlling outcomes. The approaches are assessed first by a systematic Monte-Carlo experiment. It re-balances smaller SAMs, after errors with known distributions are added. Here we find quite limited numerical differences between the CE and quadratic loss approaches. The CE approach was however considerably slower than the other candidates. Second, we tested the three approaches for dis-aggregating the Global Trade Analysis Project (GTAP) data base to provide, as an example, further agri-food detail. In such empirical applications, the distribution of the errors of the new SAM entries is typically not known. As in the SAM balancing exercise, we use CONOPT4 as a multi-purpose (non)linear solver which can be also be employed to solve the CGE model itself. For comparison, we add the specialized Linear and Quadratic Programming (QP) solvers CPLEDX and GUROBI. As in the Monte-Carlo experiment, the differences in results between the three approaches were moderate. The specialized solvers require very little time to solve the linear and quadratic loss problems. However, they did not achieve the same, very high accuracy as CONOPT4 for the quadratic loss problem. The CE problem could take longer by a factor of 100 or more, compared to a linear or quadratic loss approach solved with the specialized solvers. We conclude that using linear or quadratic loss approaches, especially combined with a specialized solver, are the most suitable candidates for larger SAM splitting / balancing problems. Additionally, we present a fast and accurate data processing chain to yield a benchmark data set for a CGE model from the GTAP Data Base which involves filtering out small cost, expenditure and revenue shares, and allows users to introduce further product and sectoral detail based on user provided information.