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GTAP Resource #2416

"META- REGRESSION ESTIMATES FOR CGE MODELS: A CASE STUDY FOR INPUT SUBSTITUTION ELASTICITIES IN PRODUCTION AGRICULTURE"
by Boys, Kathryn and Raymond J.G.M. Florax


Abstract
The selection of appropriate parameters impacts, and in some cases, drives the results of applied economic modeling exercises. Among these, choice of elasticity estimate is both particularly important to the modeling outcome, but also particularly difficult to estimate. The purpose of this study is to use meta-analysis to summarize and more accurately estimate elasticities of input substitution. In particular, this analysis will focus upon the substitutability between labor and other inputs in agricultural. Through a comprehensive literature review, a database of elasticity estimates was constructed and a meta-regression analysis performed to identify sources of variation in primary study elasticity estimates. Findings suggest that the choice of functional form, year, and short verses long term elasticity measures are important sources of variation, and factors which contribute to estimate variance may vary systematically by choice of elasticity measures. These results underline the need for researchers to be thoughtful in their selection of parameters, and suggest that it may be prudent to select elasticity estimates, in part, on the fit between characteristics of the model with which they were derived and ones own application of the estimate in a CGE context. It is anticipated that this study will contribute to both improved baseline analysis in CGE simulations and to improved ranges of estimates used in sensitivity analyses.


Resource Details (Export Citation) GTAP Keywords
Category: 2007 Conference Paper
Status: Published
By/In: Presented at the 10th Annual Conference on Global Economic Analysis, Purdue University, USA
Date: 2007
Version:
Created: Boys, K. (4/15/2007)
Updated: Boys, K. (6/6/2007)
Visits: 2,621
- Economic analysis of poverty
- Calibration and parameter estimation


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