Model Exercise 10, "Consumer Aversion to Tobacco," in Burfisher, Intro to CGE Models, 3e (2021)
November 2020

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Version: NTOBAC10
Model: Standard GTAPv7 model (uncondensed)
Data: GTAP Data Base version 10 (2014)
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I.   SUMMARY

This toy version of GTAP uses a 2-region, 3-factor, 4-commodity data aggregation.  It is used to examine a change in consumer preferences on tobacco use, described in Burfisher, Mary E. (2021). Introduction to Computable General Equilibrium Models, Cambridge University Press.  The model exercise demonstrates how to create a baseline scenario for 2014-30 and a counterfactual scenario for 2014-30 in which consumers become averse to tobacco, as described by changes in the INCPAR income elasticity parameter for tobacco in USA and ROW. 

II.   SETS

The regions are:
USA	United States
ROW	Rest of the World

The 3 factors are:
Land
Labor
Capital

The 4 commodities are:
AGR	food and agriculture
Tobacco    tobacco
MFG	resources and manufactures
SER	all services

III.   EXPERIMENT FILES: SHOCKS, CLOSURES AND SOLUTION METHOD- :

SHOCKS
The example experiments in this version include:
- GTAPUV7: uncondensed numeraire shock
- BASE: baseline scenario describes economic changes between 2014-2030 with GTAP default elasticity parameters, and no changes in tobacco preferences
- MPWR: counterfactual scenario describes economic changes between 2014-30 with reduced INCPAR parameter values for tobacco due to the MPOWER program
- SWAP:  swap real GDP with TFP to create the baseline scenario 
 
CLOSURES
Standard uncondensed GE closure is changed in TFP experiment to solve for an endogous total factor productivity growth rate that supports projected real GDP growth. 
The closure is then restored in the Baseline and MPOWER experiments, with an exogenous solution value for TFP growth and an edogenous real GDP growth rate.

SOLUTION METHODS
The preferred solution method for policy analysis is Gragg 2-4-6 -- with automatic accuracy if large shocks are undertaken. 

