Modelling Consumption and Constructing Long-Term Baselines in Final Demand

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Mun Ho
Wolfgang Britz
Ruth Delzeit
Florian Leblanc
Roberto Roson
Franziska Schuenemann
Matthias Weitzel


Modelling and projecting consumption, investment and government demand by detailed commodities in CGE models poses many data and methodological challenges. We review the state of knowledge of modelling consumption of commodities (price and income elasticities and demographics), as well as the historical trends that we should be able to explain. We then discuss the current approaches taken in CGE models to project the trends in demand at various levels of commodity disaggregation. We examine the pros and cons of the various approaches to adjust parameters over time or using functions of time and suggest a research agenda to improve modelling and projection. We compare projections out to 2050 using LES, CES and AIDADS functions in the same CGE model to illustrate the size of the differences. In addition, we briefly discuss the allocation of total investment and government demand to individual commodities.

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How to Cite
Ho, M., Britz, W., Delzeit, R., Leblanc, F., Roson, R., Schuenemann, F., & Weitzel, M. (2020). Modelling Consumption and Constructing Long-Term Baselines in Final Demand. Journal of Global Economic Analysis, 5(1), 63–108.
Advances in Methods and Theory
Author Biography

Mun Ho, Harvard University, SEAS

Visiting Scholar, Harvard China Project on Energy, Economy and Environment, Harvard University, School of Engineering and Applied Sciences.