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GTAP Resource #1763

"Capital Mobility Parameters in the Dynamic GTAP Model"
by Golub, Alla, Thomas Hertel and Elena Ianchovichina

Dynamic GTAP model (Ianchovichina and McDougall, 2001) is a multi-sector, multi-region, recursive dynamic applied general equilibrium model that extends standard GTAP model to include international capital mobility, endogenous capital accumulation, and adaptive expectations theory of investment. GTAP-Dyn model is a real assets model. That is, there is no financial market and no distinction between debt and equity investment. The distinguishing feature of the model is its disequilibrium mechanism determining the regional supply of investments. This mechanism consists of three lagged adjustments: 1) adjustment of the expected rate of return toward actual rate of return, 2) adjustment of the expected rate of return toward the global rate of return to capital − the rate of return that equalizes global saving and investment, and 3) adjustment of the perceived, by investors, normal growth in capital stock toward the actual normal growth rate. In this ongoing work we address the issue of degree of capital mobility using specific to a real assets model measure of rate of return to capital and develop strategies for estimating the capital mobility parameters determining the speed of lagged adjustment in the model.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Not published
By/In: Presented at the 8th Annual Conference on Global Economic Analysis, Lübeck, Germany
Date: 2005
Created: Golub, A. (5/1/2005)
Updated: Golub, A. (1/26/2007)
Visits: 3,466
- Calibration and parameter estimation

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