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GTAP Resources: Resource Display

GTAP Resource #2455

"CGE Model Development and Experimental Design in Applied Policy Analysis"
by Winston, Ashley


Abstract
This paper reports on some recent developmental work on the USAGE model and its application to the U.S. International Trade Commission's (USITC) recent biannual study "The Economic Effects of Significant U.S. Import Restraints".
The paper provides an overview of two main themes in the modification of the USAGE model for this project. Firstly, theoretical and data-related modifications made to the model (including motivations) are described. Secondly, calibration work, experimental design and output interpretation are discussed.
The data work on this project included the addition to the model of 18 commodities, 8 industries (including new margin industries) and 23 international regions. The reasoning behind the choice of new industries and commodities, and the method employed, are described. The need for extensive post-split editing and checking to ensure matrix balance is discussed (the importance of which cannot be overstated in a model in which some matrices range across five dimensions). A description is provided of some data related problems encountered in this database work.
On the theoretical side, the modifications to USAGE include a set of complementarity relationships (using new features of the GEMPACK modelling software) to explicitly model tariff rate quota (TRQ) systems applying to 9 sectors, and the creation of new industries and commodities in nesting structures to "mix" highly substitutable commodities in a way that overcomes some limitations of CRESH nesting.
Finally, a discussion is provided of the benefit of a careful analysis of simulation output, and how this can be used to inform further "polishing" of the model's theory and data. The importance of an iterative approach to CGE simulation analysis is highlighted, in both model development and experimental design, as are issues related to the importance of the choice of model closure for generating sensible results.


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: Winston, A. (5/1/2007)
Updated: (5/1/2007)
Visits: 2,901
- Dynamic modeling
- Calibration and parameter estimation
- North America


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