Download Tools for Trade Policy Analysis

Tools for Trade Policy Analysis
Mr. Sachin Kumar Sharma,
Centre for WTO Studies
Indian Institute of Foreign Trade,
Delhi
Email: [email protected]
Myanmar and the Asia-Pacific region: Role of policy
research in economic and trade reforms
Yangon University of Economics, 19-21 February 2015
CGE Modelling
Computable General Equilibrium.
General Equilibrium  “Economy-wide”, enough time to
achieve “equilibrium”.
Computable Solution can be computed.
Also called Applied GE.
Components
Agents: Producers and Consumers.
Factor Endowments: Land, Labour, Capital, Natural
Resources, etc.
Commodities: Different products - both goods and
services in the economy
Markets: for commodities and factor endowments
Equilibrium conditions: In N-1 markets: Walras’ Law
Welfare Analysis
Importance of CGE modeling
• Limitations of Partial Equilibrium and
Econometric:
– Resources are finite:
– Factor income is taken as exogenous, so we
cannot explain the rise in income arising from rise
in factor returns, etc.
– Other features like aggregate output are taken as
exogenous in some PE models
When and where to use CGE?
• International Trade Policies and their
economy-wide impacts like FTA
• Other Public Policy Impacts in different sectors
• Energy and Environment
• Impacts of technology/technical change…
When not to use CGE?
• to capture economy-wide impacts and to account for
the fact that resources are limited!
• NOT to use CGE
– Small sector/region/issue with rich data on particular
aspects: impossible to incorporate into a CGE model, e.g.,
time-series/survey data.
– Complex model capturing structural details of a
region/sector that cannot be fed into a CGE framework.
– Where one requires statistical significance of the results
(although there is a way of doing a similar thing in CGE)
How to get the best of both worlds?
• Feeding the results from “structurally rich” PE
model into CGE
• Using econometric estimates to calibrate the
parameters in CGE
• Linking a specialized PE model to CGE
• Feeding the CGE results into a PE/econometric
model
An Introduction to the GTAP Model
• A multi-region multi-sector, static model
• Model components:
– Regional Household RH: Receives all income and spends
based on Cobb-Douglas UF.
– Government Consumption: (From RH)
– Private Consumption: (From RH)
– Investment, Global Bank, and Savings : (From RH)
– Firms: Intermediate and factor demand; product demand
from G & P (CDE); Investment from savings; 0-profit, CRS.
– International Trade: Armington; Domestic-import CES
– International Transport Services
– Equilibrium Conditions
Working with RunGTAP
• Free Download at www.gtap.org
• GTAP data base: GTAP 6 version free.
(Myanmar data)
• Closure
• Shocks
• Solve
• Results: Viewsol, Viewhar
GTAP Data Base
GTAP Data Base
Reference Year
Regions
Sectors
8
2004 & 2007
129
57
7
2004
113
57
6
2001
87
57
5
1997
66
57
4
1995
45
50
3
1992
30
37
2
1992
24
37
1
1990
15
37
How to run simulation
• DATA Aggregation: How to do data
aggregation?
(https://www.gtap.agecon.purdue.edu/databa
ses/archives.asp)
• GTAP STATIC model: How to load data to GTAP
model
• Shock
• Result
• Interpretation
• Exercise
Thank you!
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