About GTAP: Center for Global Trade Analysis

Thomas Hertel
Distinguished Professor and Executive Director
Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University

“GTAP was born out of frustration. Those of us seeking to make forward progress in global CGE modeling were frustrated with the lack of replicability and transparency that reigned in this field (outside of Australia) circa 1990. It was also the case that large, multi-year projects undertaken by forward-looking research managers in public institutions had to start from scratch and ended up reinventing the wheel – particularly when it came to obtaining and reconciling global economic data. This proved very time-consuming and limited the effectiveness of most policy-oriented projects in the global CGE arena. By the end of the one to two years it typically took to come up with a credibly parameterized model, sympathetic managers and decision makers had generally moved on to other interests, and even other positions. By providing a common, widely accepted, analytical data base for global economic analysis, GTAP allows economists to respond quickly to emerging issues, focusing their scarce resources on what really matters. This is typically an accurate characterization of the proposed policies and an improved specification of economic behavior in the sector or region of interest. As a consequence, the GTAP Database is now used on a regular basis by economists and decision makers in many of the world’s leading institutions dealing with international trade and environmental policies. This widespread adoption carries the added benefit that results can be readily communicated across departments, ministries and nations, with virtually no loss of content through translation. Today, 25 years after the project’s founding at Purdue University, GTAP is a language spoken around the world!”

Bob Koopman
Chief Economist and Director of the Economic Research and Statistics Division
World Trade Organization

“The Global Trade Analysis Project has been instrumental in advancing policy analysis and insights on economy-wide effects for over 20 years. The initial objective of a common database and economic model to assess trade policy changes, which has evolved into energy and environmental questions, filled a major need and truly lowered to "cost of entry" for many researchers and organizations. The collective efforts to develop, refine and update the database and model ensures up to date data and techniques, and helps ensure policy makers benefit from top notch analysis. One important advantage the GTAP approach provides over econometric and partial equilibrium analysis is the ability to illustrate tradeoffs across the economy and to prevent "magical" results so many policy makers would like to see and some other models deliver. The fact is that applied general equilibrium analysis keeps you grounded in the real constraints an economy faces in terms of resource endowments and technologies. Partial views of policy changes often ignore these tradeoffs and seem to suggest to policy makers that economic growth and efficiency are simple things to be released when policy changes. While GTAP and applied general equilibrium has its very real limitations and challenges having this data and toolkit in your analytical portfolio is critical.”

John Reilly
Co-Director
Massachusetts Institute of Technology, Joint Program on the Science and Policy of Global Change

“Coming from a perspective of natural resources and the environment, first at the USDA and then at MIT with focus on climate change, I saw the value of an economy-wide approach to evaluating resource and environment issues. However, the challenge with standard input-output, social accounting frameworks is that the wonderful economic assumption that prices represent the marginal value of inputs and outputs, allowing aggregation across ‘apples and oranges’, does not hold for environmental externalities that by definition are not incorporated into market prices. Each dollar of energy or land use does not have the same environmental implication. Thus, what one needed was enough disaggregation to add supplemental physical accounts to the economic data—how many tons of coal (and resultant carbon dioxide emissions), how many hectares of land (lost carbon, albedo change), and what improvements or limits on improvements in efficiency in energy conversion are possible. Substitution elasticities in the power sector, if relative prices were pushed far enough, could end up with more energy coming out than was present in the fuel input, a violation of basic laws of thermodynamics. GTAP has gradually added physical accounting of energy, greenhouse gases, land and water, and more recently greater detail in the power generation sector to the underlying economic data, while demonstrating methods for incorporating that data into analysis. This has been absolutely crucial to understanding the connections between the world economy and the earth system—or more aptly, to allow the creation of models of the earth where human activity is an active part of the system. And, by making this data and research widely available, it has facilitated different avenues of analysis and model development. Advances in computing power have been phenomenal over the past decades—however those advances would be useless without advances in data and analytical approaches to using it. GTAP is the major (only) data resource of for economy-wide modeling.”