Terrie L. Walmsley

Dynamic Modeling and Applications for Global Economic Analysis: A Baseline Scenario for the Dynamic GTAP Model

Paper developed for the Short Course on the Dynamic Model, October, 2000. The increasing interest in dynamic models and in particular the development of the Dynamic GTAP model at the Center for Global Trade Analysis has highlighted the need to develop a base case scenario depicting how the world economy might be expected the change over the next 20 years. The purpose of this paper is to show how such a base case scenario has been created for use with the Dynamic GTAP model (Ianchovichina, 1998 and Ianchovichina, McDougall and Hertel, 1999) and GTAP data base. This document is intended to be used in conjunction with a base case aggregation program which was constructed at the Center for Global Trade Analysis. This program takes as its inputs macro and policy forecasts and allows the user to: 1) alter various assumptions about the implementation of policies; and 2) aggregate over time, regions and commodities; to obtain a base case scenario which is specific to their needs. Although the base case program is specifically designed with the Dynamic GTAP model in mind, it is general enough to be used with other models. It should be noted however, that the base case scenario developed here is very general, it looks only at the standard macro aggregates and does not provide alternative optimistic or pessimistic scenarios.

Dynamic Modeling and Applications for Global Economic Analysis

The book presents applications that deal with important policy issues using an original global dynamic CGE framework. The applications can be grouped into two major areas – environmental and integration issues. The environmental issues, well suited for analysis with dynamic GTAP, range from CO2 emissions trading, to carbon policies such as reforestation programs and carbon subsidies, to technological progress in agriculture. The rest of the applications focus on integration issues and issues on which there are very few simulation studies such as behind the border measures (e.g. rules governing foreign investment, e-commerce regulations, trade in services, harmonization of technical standards, sanitary and phyto-sanitary regulations, the streamlining of customs procedures), demographic change and migration. Available for purchase at: Cambridge University Press Applications available at: www.gtap.agecon.purdue.edu/models/Dynamic/applications.asp

The Global MRIO Lab–charting the world economy

ABSTRACT We describe the creation of the Global Multi-Region Input–Output (MRIO) Lab, which is a cloud-computing platform offering a collaborative research environment through which participants can use each other’s resources to assemble their own individual MRIO versions. The Global MRIO Lab’s main purpose is to harness and focus previously disparate resources aimed at compiling large-scale MRIO databases that provide comprehensive representations of interregional trade, economic structure, industrial interdependence, as well as environmental and social impact. Based on the operational Australian Industrial Ecology Lab, a particularly important feature of this cloud environment is a highly detailed regional and sectoral taxonomy called the ‘root classification’. The purpose of this root is to serve as a feedstock from which researchers can choose any combination of regions and economic sectors to form a model of the economy that is suitable to address their particular research questions. Thus, the Global MRIO Lab concept enables enhanced flexibility in MRIO database construction whilst at the same time saving resources and avoiding duplication, by sharing time- and labour-intensive tasks amongst multiple research teams. We explain the concept, architecture, development and preliminary results of the Global MRIO Lab, and discuss its ability to continuously deliver some of the most prominent world MRIO databases.

Dynamic Modeling and Applications for Global Economic Analysis: An Overview of the Dynamic GTAP Data Base: The Data Base Construction and Aggregation Programs

The GDyn Data Base, used with the Dynamic GTAP model, is based on the GTAP Data Base (Dimaranan, 2005), which describes the global economy in a given year (2001 for the GTAP 6 Data Base). The GTAP Data Base is augmented with additional data required for the Dynamic version of the GTAP model. This chapter covers the preparation of these additional elements of the GDyn Data Base, 1 and the manipulation and aggregation of the GDyn Data Base with various utility programs. The focus is on the additional data requirements, with minimal discussion of the dynamic parameters. Readers interested in the underlying GTAP Data Base are referred to Dimaranan (2006). The GTAP data base (Dimaranan, 2006) is changed in the following three ways to obtain a database for GDyn: a) Six new arrays, listed in table 1, are added to the standard GTAP data file. The values of regional savings also change from those in the standard GTAP Data Base. The dimension of the array however does not change. These changes are discussed in section 2 below. b) A new parameters file contains the seven new parameters used in the dynamic theory (Table 2). The methodology for estimating econometrically, and in some 1 We have occasion at various points to refer to specific versions of the GDyn data base. We use a version numbering system of the form <GTAP release>:<GDyn version>. The element <GDyn version> is of the form <GDyn major version>.<GTAPDyn minor version>. We declare a new major version to mark a major difference in data content; a new minor version, to mark a change in format or a minor change in content. For example, version 6:1.0 of the GDyn data base is based on release 6 of the GTAP data base. Version 6:2.0 is based on the same GTAP release, but incorporates more recent GDyn specific data. At the time of writing, the current version is 6:2.0.

Dynamic Modeling and Applications for Global Economic Analysis: Implementing the Dynamic GTAP Model in the RunDynam Software

The purpose of this chapter is to introduce the reader to the publicly available software – RunDynam – which is used to carry out the applications presented in Part III of this book. The RunDynam program is based on the GEMPACK suite of software (Harrison and Pearson, 1999), which is specifically designed to solve non-linear general equilibrium models. Other general equilibrium models solved using the GEMPACK software suite include the standard GTAP model and the Monash model of Australia. The RunDynam program has been specially tailored to the needs of the GDyn model and other dynamic models. It offer the user a great deal of flexibility in constructing simulations. It is available from the Centre of Policy Studies at Monash University, Australia.

Building a global database: consequences for the national I–O data

ABSTRACT Global economic analysis requires consistent and balanced data, which necessitates the reconciliation of datasets from both national and international sources. In the case of the Global Trade Analysis Project Data Base, datasets supplied by international sources are considered preferable to national input–output (I–O) tables. As a result, the national I–O data can experience significant adjustments during the reconciliation process due to differences between the national and international datasets. The purpose of this paper is to examine the extent to which national I–O data change during reconciliation. The results demonstrate that the I–O data are altered by the construction process, particularly from the reconciliation of the national I–O data to the international trade and energy datasets. Closer examination reveals potential issues with both the trade and energy datasets, as well as the national I–O data – illustrating the challenges associated with reconciling data from multiple sources.

Dynamic Modeling and Applications for Global Economic Analysis: APPLICATIONS OF DYNAMIC GTAP

The book presents applications that deal with important policy issues using an original global dynamic CGE framework. The applications can be grouped into two major areas – environmental and integration issues. The environmental issues, well suited for analysis with dynamic GTAP, range from CO2 emissions trading, to carbon policies such as reforestation programs and carbon subsidies, to technological progress in agriculture. The rest of the applications focus on integration issues and issues on which there are very few simulation studies such as behind the border measures (e.g. rules governing foreign investment, e-commerce regulations, trade in services, harmonization of technical standards, sanitary and phyto-sanitary regulations, the streamlining of customs procedures), demographic change and migration. Available for purchase at: Cambridge University Press Applications available at: www.gtap.agecon.purdue.edu/models/Dynamic/applications.asp

Dynamic Modeling and Applications for Global Economic Analysis: INTRODUCTION AND OVERVIEW

The book presents applications that deal with important policy issues using an original global dynamic CGE framework. The applications can be grouped into two major areas – environmental and integration issues. The environmental issues, well suited for analysis with dynamic GTAP, range from CO2 emissions trading, to carbon policies such as reforestation programs and carbon subsidies, to technological progress in agriculture. The rest of the applications focus on integration issues and issues on which there are very few simulation studies such as behind the border measures (e.g. rules governing foreign investment, e-commerce regulations, trade in services, harmonization of technical standards, sanitary and phyto-sanitary regulations, the streamlining of customs procedures), demographic change and migration. Available for purchase at: Cambridge University Press Applications available at: www.gtap.agecon.purdue.edu/models/Dynamic/applications.asp