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GTAP Resource #6831

"Introducing foresight to the standard GTAP model: the implications of stockholding for expected and unexpected productivity shocks"
by Ivanic, Maros and Jayson Beckman

There is no doubt that the standard GTAP model has been tremendously useful in a wide range of policy analyses. Despite its success, one of the frequently mentioned drawback is the model’s comparative static nature, where all shocks are executed at the same time with no visibility of the possible interactions among the shocks. While many dynamic versions of the GTAP model exist, some with a degree of foresight, the previous applications have not allowed for a consistent and systematic treatment of expected and unexpected future shocks with a flexible level of foresight. In this paper we develop a framework that introduces foresight to the standard GTAP model and solves the system with a determined level of limited foresight. We showcase this approach in the case of stock-holding in agriculture where we demonstrate that the presence of stocks dampens the size of productivity shocks, especially if the shocks are anticipated. The flexibility of our framework in permitting different foresight lengths and the introduction of shocks with different advance notice make it also useful for other dynamic behaviors in the model, including capital accumulation, labor productivity, and others.

Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Created: Ivanic, M. (4/11/2023)
Updated: Ivanic, M. (6/16/2023)
Visits: 353
- Advances in quantitative methods
- Dynamic modeling

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