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GTAP Resource #3370

"Sequential calibration of economic simulation models, the cases of CAPRI and a CAPRI-GTAP link"
by Jansson, Torbjorn and Wolfgang Britz

Increasing demand for policy impact assessment regarding social, economic and environmental aspects asks for combined application of different models and tools. CAPRI, itself containing model linkages, has in turn also been repeatedly linked in various manners to more aggregate CGE models (e.g. Jansson et al. 2009, Nowicki et al. 2009) and macro-econometric models (Jansson et al. 2008).

The first part of the paper briefly introduces the concept of sequential calibration as integrated in CAPRI since 1999 to link the supply and demand module, and in the CAPRI-GTAP link discussed in the main part of the paper. It is based on iteratively updating parameters of behavioural and production function parameters in one model based on the results of second one, while feeding an average of past iterations of endogenous variables such as prices from the updated model back to the second model. The process is repeated until relative differences between iterations fall below a pre-defined threshold. Given a convex and continuously differentiable response of the second model to the endogenous variables fed back, analysis and experience suggest that the process is indeed converging to a fix point.

The second part of this paper describes how sequential recalibration was used to link CAPRI with GTAP in an application that analysed the impacts of a non-agricultural market access (NAMA) trade agreement. NAMA implies changes in non-agricultural commodities that impact indirectly on agriculture via primary and intermediate factor prices and consumer expenditure. Via the link, the partial model CAPRI computes regionalized impacts on agricultural production, agricultural incomes and derived environmental indicators. The application illustrates how sequential recalibration can be implemented in the context of PE-GE models.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Not published
Date: 2010
Created: Jansson, T. (4/15/2010)
Updated: Batta, G. (5/19/2010)
Visits: 1,461
- Calibration and parameter estimation
- European Union

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