GTAP Resources: Frequently Asked Question Details

There are a variety of solution procedures available for use with the GTAP model. These are dictated by the GEMPACK software suite which is used for model implementation and solution.

The simplest way to solve the OneGTAP model is to simply treat it as a set of linear equations. Inverting the associated matrix and applying the desired shocks to the exogenous variables results in what is known as the Johansen solution procedure.

However, the Johansen procedure is very inaccurate when the exogenous shocks are large. This is because the value shares underlying the model are not constant -- rather they are a function of relative prices. For large changes, these share changes can be quite important. The Gragg solution procedure updates these shares in order to obtain an accurate solution to the underlying non-linear equation system.

The specific approach used in the Gragg solution procedure is to break the shocks up into smaller parts: 2, then 4, then 6. Since each successive solution is more accurate, the Gragg procedure extrapolates from this sequence to obtain a very accurate estimate of the true solution.