GTAP Resources: Resource Display
| GTAP Resource #7826 |
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"Implicit CES Nesting in CDE-Based Demand Systems" Authors: Cui, Hao David Abstract This paper introduces an implicit CES nesting approach, implemented via an EP-matrix formulation, to improve the representation of price-driven household demand responses in the MAGNET computable general equilibrium model. The approach addresses well-known limitations in the price elasticity structure of CDE-based demand systems, which affect both the standard GTAP CDE and its adjusted variants used for long-run analysis. By replacing the EP and EY matrices while preserving the underlying CDE demand equation, the implicit approach improves substitution behaviour without altering income specifications. Substitution patterns are calibrated directly from uncompensated own-price elasticities, reducing unintended complementarity and enhancing policy transmission, particularly in food systems. The method is transparent, internally consistent, and directly comparable with existing GTAP demand specifications. Implemented using GTAP 11c data and SSP2 baseline assumptions, the new system yields more credible price responses and more robust policy results. |
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- Advances in quantitative methods - Model extension/development - Not Applicable |
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Public Access  GTAP Resource 7826 (57.3 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 4/30/2026 12:56:16 PM
