1、An introduction to GTAP applications relevant to ESCAP analytical work in trade,A series of information sharing sessions on knowledge acquired through individual training,Mia Mikic, TID,More information on www.gtap.agecon.purdue.edu/,Overview on presentation,Why opting for a general equilibrium anal
2、ysis?applied / computable general equilibrium models Why GTAP? Uses for ESCAP analytical work,Models,Model is a stylized simplification of reality in which behavior is represented by variables and by assumptions about how they are determined and interact. They allow us to frame the analysis in such
3、a way that we are able to think consistently and logically about complex issues, to work out how changes in an economic system matter, and (sometimes) to make predictions about economic performance.,General equilibrium,Old idea: Walras (1874), Edgeworth (1881), Arrow and Debreu (1954),X,X1,Y1,Y,U,A
4、situation where all markets in an economy are simultaneously in equilibrium, that is, where prices and quantities do not change.,p,E,Partial equilibrium,Marshall (1890)Equality of supply and demand in only a subset of an economys markets - usually just one - taking variables from other markets as gi
5、ven.,p,q,D,S,q1,p1,e,Evaluation of trade liberalization,Partial equilibrium models were most commonly used (at least until relatively recently) Standard presentation for a so-called “small country fiction”:,a,c,b,d,So we opt for GE analysis for,Theoretical consistency (Walras) Accounting consistency
6、 (no double-counting) Inter-industry effects (inter-country effects) Welfare analysis vs. prices/surpluses Perspective Better informed debate and policy analysis,When not to use GE?,Interest in one sector only Interest in introducing a very complex interpretation of one sector/industry Data not avai
7、lable Time is not available ,SOFTWARE,What is CGE /AGE analysis?,DATA,NEW DATA / SOLUTION,CONCLUSIONS,THEORY/ MODEL,POLICY/ SHOCK,IN,OUT,GTAP,Global Trade Analysis Project - Developed and coordinated by the Center for Global Trade Analysis, Purdue University Culture A global network of researchers a
8、nd policymakers conducting quantitative analysis of international policy issues Collaboration among academia, public sector and private sectors worldwide A program of distance-plus-residential intensive training courses, at Purdue and outside An annual conference (11th in 2008) Thousands of GTAP-bas
9、ed applications available on website 24 consortium members supporting GTAP financially,Data,Database (standalone product) Detailed inter-industry flows (I-O tables) Trade flows (bilateral) Protection (bilateral from tariff line), supplementary protection data Energy-use dataSee more on https:/www.gt
10、ap.agecon.purdue.edu/databases/v6/default.asp,Model,Current model GTAP ver 6.2a - family of models (standard-static, dynamic) Describes global economy It is applied GE model Same model structure for each region Links the economies through trade flows (and in some way investment),GTAP model (contd),9
11、6 regions (v.6.2a) and over 100 in v.7 (2008) 57 sectors Each region balanced (BoP=0) S-net I=X-M= trade balance World is balanced Global saving=global net investment Total exports=total imports Features: Perfect competition and CRS Armington assumption Comparative static,Non-standard features Deman
12、d from a CDE function Sluggish primary factors Regional household Global transport sector Global bank,Policy/shocks/ scenarios,Trade liberalization (trade reform) policy changes by multiple players Important to set endogenous and exogenous variables right in synch with the chosen policy shock,Resear
13、ch questions = base for scenarios,Impact of DDA globally or for a single economy Impact of DDA on preference erosion Impact of an expansion of an existing trading block: (e.g. adding Japan to BIMSTEC) Impact of trade reform in presence of sensitive products Impact of trade reform when competition is
14、 not perfect Impact of trade reform when there is labour mobility Impact of trade reform on rates of growth Impact of trade reform on energy emissions,Software,GEMPACK RunGTAP AnalyseGE,Numbers/Results,RI-RO The results of simulations are only as good as the specifications of the models (including p
15、arameters) and the data that are fed into them Numbers that come out should only be used to give a sense of the order of magnitude that a change in policy can mean for economic welfare or trade (forecast or not?) Dynamic models estimate larger gains from trade reform,Results,Critical interpretation-
16、 using decomposition of welfare results Sensitivity analysis- changing the models parameters, specifications to determine whether the simulation results are significantly affected Ex-post validation needed to increase confidence in the numerical results (long term),Limitations/criticisms,Quality of
17、information /sensitivity of the results to assumptions do not warrant assertions of a degree of precision in simulations of the future Obscured important underlying relationships Data low quality/missing Responsiveness of demand and supply to price changes are not estimated well / not accurate Choices among scenarios and model specifications can imply very different results Little evidence of ex-post validation of past simulations,
