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GTAP Events: 1999 Advisory Board Meeting

General Information
Date: June 14-16, 1999
Location: Purdue University, West Lafayette, Indiana, U.S.A.
Agenda: PDF file 1999 Agenda


Agency Reports and Representatives
  • Liwayway Adkins, US Environmental Protection Agency
  • Ali H. Bayar, European Commission
  • Jean-Marc Burniaux, OECD Development Centre
  • Roy Darwin, ERS/USDA/ATAD/DE
  • Mustafa Babiker, Massachusetts Institute of Technology
  • Soren Frandsen, DIAFE
  • Kyle Johnson, US International Trade Commission
  • Yoshinobu Okumoto, Economic Planning Agency of Japan
  • Mukela F. Luanga, World Trade Organization
  • Will Martin, The World Bank
  • Thomas Rutherford, Danish Ministry of Business and Industry (MobiDK) and the University of Colorado
  • Karen Schneider, ABARE
  • Hans Timmer, Netherlands Bureau for Economic Policy Analysis (CPB)
  • Frank van Tongeren, Agricultural Economics Research Institute - LEI-DLO
  • Larry J. Williams, Electric Power Research Institute (EPRI)
  • Joseph Francois, Erasmus University
  • Kym Anderson, CIES, University of Adelaide
  • Philippa Dee, Productivity Commission
  • Alan A. Powell, Monash University
  • Harmon C. Thomas, Division for International Trade and Commerce (UNCTAD)


Alan A. Powell Award
Each year we recognize one individual from the Board with the Alan A. Powell award for outstanding contributions to the project. Through his example with the IMPACT project in Australia, and his subsequent, unselfish contributions to GTAP through the advisory board, he has provided an outstanding role model.

We are very appreciative of the efforts which the board members put into the Project. It is clear that as the project grows, this input becomes ever more critical. Indeed, this wealth of input from the board also makes it very difficult to select just one individual each year. This year, the staff of the Center has selected Frank van Tongeren to receive the Alan A. Powell award!

In the two and a half years that Frank has served on the GTAP board, he has made contributions in a great many areas:
  • He began by mobilizing a new regional data base for use in the version 4 prerelease. Unlike many of the other contributions, this one arrived right on schedule at the very first board meeting which he attended!

  • Frank proceeded to participate in our annual short course, first as a participant, and then as an instructor.

  • Last year, at the LEI/DLO, he organized a superb, Sixth Annual short course which goes down on record as being one of the best courses to date.

  • Together with Hans van Meijl, Frank has contributed to the GTAP technical paper series, with a very creative piece of work linking trade with technology spillovers.

  • Most recently, Frank mobilized a successful proposal to the European Commission to fund the development of a network of GTAP contributors in Europe, whose task it will be to evaluate and improve upon GTAP's capabilities for addressing several major policy questions facing Europe.

  • Finally, Frank has been an active member of the board, taking great interest in the GTAP's progress and rendering valuable advice.
In sum, Frank van Tongeren has been an outstanding board member and we look forward to continued contributions from him.

Congratulations, Frank!


Budget
More time was devoted to discussion of the budget during this year's board meeting. This is an indication of the maturation of the GTAP effort. Tom Hertel proposed a 16% increase in the annual consortium fee to $17,500. It represents the first time this fee has been increased in the six years since the consortium was established. When combined with Data Base revenues and short course earnings, these revenues will enable the Project to maintain a core staff of two part-time faculty members, two full time economists, one administrative professional, one post-doctoral professional and two graduate students. In addition, we project five or six additional graduate students working on special, GTAP-related research projects.

In the coming year, the Center will also join with members of the Board in order to actively pursue public funding for data development activities. Particular effort will be expended in the area of services trade data, where there is a great deal of work to be done.


Data Base Updates
Data Base Management
In an effort to better meet our goals for a timely, high quality delivery of the version 5 Data Base, Robert McDougall has developed a formal plan for managing this release. He has also laid out a set of standards to which data base development work at Purdue must adhere. To the extent that outside contributors can also follow these standards, this will greatly facilitate interactions.

From the perspective of the board members, there are a few key changes that deserve highlighting here. First on everyone's mind is surely the timetable. We project a pre-release date of December 1, 1999 and a final release date of June 1, 2000 (the "millennium data set"?).

The second important point has to do with the full automation of the data base construction process. We are well on the road to this goal already. However, we envision that by the fall we will be able to easily remake the data base whenever any new information becomes available. This changes the way we can interact with consortium members. In fact, Rob has proposed that, after the initial pre-release, we will continuously update the Data Base whenever bugs are located or, as new information becomes available. Obviously these "interim" pre- releases cannot be supported - rather they will be supplied on a "use at your own risk" basis. (Of course feedback will be most welcome!) However, this process of continuous improvement will surely be useful for those of you trying to build up your analysis of critical issues, prior to the final release of version 5. In this way you can be assured of working with the most recent data. Also, through the use of several such prerelease updates, the switch to the final release will entail a minimum of changes to your results/policy prescriptions. This was a major area of frustration for some of the board members with version 4.

Getting the Data Base documentation out the door has also been a major challenge in the past. Coordinating dozens of authors (many of who would prefer to be modeling or working with data instead of writing) is no small chore! What we propose to do this time parallels what we hope to do on the Data Base itself. The basic idea is to maintain a web page - much like the one that now contains the GTAP v. 4 documentation. A full table of contents will be there - together with links to PDF files for the most recent version of the documentation on each section. Of course this documentation will often be very rough and it is important that it be used only for information purposes. It definitely should not be printed out and reproduced, as this could give a bad image to the authors, the project and ultimately the entire Data Base. (This was somewhat of a problem with version 4, after we distributed some preliminary documentation at the 6th Annual Short Course.) Do you think this will work? Once all of the chapters are finalized, we will publish the hard copy version of the documentation. As with version 4, the web version will be subject to continuous correction, so it is always the preferred source.

GTAP Policy on Value-Added Retailing of the Data Base
In thinking about this new issue, we have sought to apply the principles behind our existing policy which are:
  • free access to highly aggregated versions of the Data Base,
  • otherwise, we require data users to make a money contribution to Data Base development and maintenance,
  • the size of the contribution varies with ability to pay,
  • we encourage but do no require users to join the GTAP community and contribute to the Data Base.
For GTAP value-added retailers (VARs) who wish to supply value-added data bases larger than 10x10, we propose to:
  • require that the end user acquire a GTAP data license,
  • offer flexible pricing for the license, based on the size of the Data Base supplied to the end user (price is a purchase price not a periodic rent),
  • by default, base the price on our highest standard license price (corporate license, new user); but allow academic and upgrade discounts as appropriate,
  • if the VAR supplies the Data Base as part of a size-restricted-aggregation product, base the license price on the size of the largest Data Base incorporated in the Data Base, not on the size of the aggregated Data Base, (*)
  • require the VAR to license the product to the Center free of charge on most-favored-customer terms,
  • require the VAR to display prominently to end users:
  • their GTAP license,
  • GTAP contact information,
  • pointers to GTAP data documentation on our web site,
  • a statement that the CGTA is happy to take questions about original GTAP data, but cannot help with data modified by the retailer.
(*) This refers to a somewhat complicated scheme, under which a retailer sells a product that contains a large aggregated GTAP Data Base, or the full-size GTAP Data Base, but denies end-users direct access to it. Instead, the retailers let end-users create their own aggregations of the large Data Base, subject to some size limitation. For example, the retailer might ship a 20x20 Data Base, but let end-users use only 10x10 or smaller aggregations.

In such a case, we would base our terms to the retailer on the larger, 20x20 Data Base size, not on the smaller 10x10 size.

For VARs who wish to supply value-added Data Bases less than 10x10, we propose to:
  • not require end-user licensing,
  • require the VAR to license the product to us free of charge on most-favored-customer terms,
  • require the VAR to make the value-added data base freely accessible and freely redistributable,
  • require the VAR to allow us to publish the value-added Data Base, on our web page or otherwise, with due acknowledgement,
  • note that the requirements for the value-added Data Base do not extend to any data sets not derived from GTAP that the retailer may bundle with the GTAP-derived product;
OR, at their option, treat them on the same basis as retailers of > 10x10, and charge as if for a 10x10 Data Base.

New National Data Bases
Based on the deliberations at the board meeting, there are already several commitments for new Data Bases in version 5.

The European Commission will be funding work to fully disaggregate the EU-15 member countries. The EC also envisions funding work to disaggregate some of the countries in what is currently termed the CEEC region (Central and Eastern Europe). The Japanese EPA envisions contributing a new Data Base built upon the recently released, 1995 IO table for Japan. At the request of the Japanese EPA, which is doing work for the Economic Committee of APEC, we will disaggregate Peru in the version 5 Data Base. This Data Base was contributed too late to be included in version 4, but it will be incorporated into version 5. There was also discussion of the possibility of new Data Bases for Korea, the US, and various economies in Northern and Southern Africa. No firm commitments have yet been made in this regard.

Tom Rutherford's Proposal: Establishing a Common Baseline Projection
At the bottom of this note is a draft summary of a meeting after the main Board meeting, on sharing information about baseline scenarios for CGE projections. Comments and corrections welcome.

This is how the meeting came to be (many of you know all this, but some missed all or part of it). At the Board meeting, several representatives spoke about CGE projections work at their agencies. And Tom Rutherford gave a presentation on developing a baseline for dynamic CGE analysis. On Thursday afternoon, as we were discussing off-board meetings for Friday, we decided we should include a meeting on baseline projections. On Friday the meeting duly occurred, and most of the representatives still in town attended.

From the meeting, the general consensus was that we should assemble baseline scenario information and share it over the internet. See the attached summary of the meeting for details. As the summary shows, the consensus doesn't extend to every detail; where there were differing points of view, I've tried to note them all without reconciling them. I haven't recorded who was present or who said what, partly because I don't entirely remember.

How does this relate to Tom Rutherford's proposal? We don't have Tom's views on this yet, since he left Thursday. Broadly speaking, they appear different but compatible. Many of the points made at the Friday meeting repeat points Tom made in his presentation. The Friday proposal takes one part of Tom's proposal and pushes it further. On the one hand, it doesn't involve a template dynamic model, as Tom's does; on the other, it goes beyond Tom's proposal for a single scenario, to cover a collection of scenarios from diverse sources.

My two cents worth: Tom's proposal looks good for providing instructional materials, and helping new players get into the projections game (perhaps more specifically, the climate change projections game). The Friday proposal is suitable for consortium members who have their own specific projections needs and practices, but feel that they could learn and profit from parallel work elsewhere. There doesn't seem any reason we can't have both, or a combination of the two.

We don't have the GTAP development mailing list in place yet; in lieu of that, I've attached the distribution list I used for this message.

Meeting on baseline scenarios: draft summary
On April 16, following the GTAP board meeting, several of us met to discuss baseline scenarios for CGE projections. Here is a [draft] summary of points made in the discussion.
  • Many GTAP users are doing dynamic modeling and need baseline scenarios.
  • There are economies to be gained from sharing information.
  • Not everyone has the same needs or wants to use the same scenarios. We may want several alternative scenarios for the same variable, e.g., both IPCC and World Bank GDP projections.
  • As far as possible, the shared data should be atheoretic, so that they are useful to users of different models.
  • For the same reason, it would be desirable to provide data at the country rather than the GTAP region level.
  • It would be convenient to provide the data on a web page.
  • We would not need to provide all the data directly on the web page; we might provide links to other sites.
  • It would be convenient to be able to download the most widely used series from a single site.
  • Problems might arise if users mixed and matched incompatible scenarios for different variables, e.g., an optimistic GDP scenario and a pessimistic investment scenario. A possible solution is to group the data into complete multi-variable scenarios, e.g. a World Bank scenario for population, GDP, etc; an IPCC scenario; etc.
  • Also useful would be information on sources, methods, and citations for the various series.
  • A suitable typical time horizon is 2050. Some users might want to go out as far as 2100 (and might not be satisfied to extrapolate trends from before 2050).
  • To be widely useful, a series should run at least to 2010.
  • A suitable typical starting date would be 1990.
  • Good historical coverage pre-1990 would be nice to have, some day.
  • Variables of interest include:
    • population
    • labor force
    • labor force, by skill level
    • human capital
    • physical capital
    • GDP
    • household consumption
    • investment
    • global saving
    • depreciation
    • technological progress
    • energy prices
    • energy usage
    • energy supply
    • protection

  • Possible data contributors and sources include:
    • ABARE
    • CPB
    • DoE
    • EC
    • ERS
    • IEA
    • IISA
    • IPCC
    • Project Link
    • World Bank


Sectoral Issues
Energy Data Base
The Center is currently in the second year of work on a US Department of Energy grant, jointly administered with the University of Colorado. The goal of this project is to upgrade the energy content of the GTAP Data Base in order to facilitate improved analysis of the trade implications of climate change. Truong Truong presented a summary of this work to the board. This led into a discussion of several issues:
  1. How much difference do these energy data make to analyses of non-energy issues?

  2. Are the combined price and quantity flows for energy commodities always more reliable than the value flows in the original Data Base?

  3. Can we document the improvement in climate change analysis which is enabled by the new GTAP-E Data Base?

These issues were pursued further in a meeting of the energy sub-committee, the minutes of which follow.

GTAP - Energy Committee meeting on April 16 - draft summary

The Energy Committee met On April 16, following the GTAP Board Meeting, to discuss issues relating to the energy Data Base. Present at the meeting were:
Liwayway Adkins
Mustafa Babiker
Ali Bayar
Jean-Marc Burniaux
Karen Schneider
Hans Timmer
Truong Truong
Absent:
Tom Rutherford
Larry Williams
Following is a summary of the points raised at the meeting:

(1) A study should be carried out at GTAP looking at the difference between GTAP and GTAP-E Data Bases with regard to the following variables:
factor intensities,
energy intensities,
trade matrix, etc.
Mustafa Babiker also mentioned about a previous study (Rutherford and Babiker, 1998, GTAP-E A Global Energy-Economy Dataset - see Consortium Website, colorado.pdf) which may be relevant to this study.

(2) Some simulations are also to be carried out using the standard GTAP Model with GTAP and GTAP-E Data Bases and the results compared. One of the simulation can focus on the energy sectors (e.g. reduction of CO2 emission), another more 'generic' experiment to look at the effect (if any) of changing the Data Base from GTAP to GTAP-E on the results of a 'standard' experiment (such as trade liberalisation).

(3) On the issue of GTAP-E Data Base update for version 5:
  • Jean-Marc Burniaux mentioned that Christophe Complainville of the OECD may be able to provide the updated energy volume Data Base in time for updating the GTAP-E Data Base for version 5. Jean-Marc is going to inquire and will inform on this.

  • Karen Schneider mentioned about an Asia Pacific Energy Research Center (APERC) doing research on energy prices for the Asia Pacific area (contact person: Alistair Stevenson?). Karen is going to forward to Truong more information on this Center.

(4) Other issues:
  • Price index for energy commodities: for future update, it was suggested that the IEA could be investigated as a source for oil, coal and electricity price indexes. [At the meeting, it was mentioned by Truong that the price index currently used to convert all energy prices to the base year is the US consumer price index. However this was subsequently found not to be the case: see Babiker and Malcolm (1998) "Documentation for Energy Price/Tax Database", Center for Global Trade Analysis, page 4. The price index used was either the product-specific wholesale price index, where available, or the retail price index. For countries where no such index is available, the US index adjusted for the nominal exchange rate is used instead.

  • Regional aggregation: at the moment, GTAP version 4 regional classification does not make a clear distinction between energy exporters and energy importers in some of the regional aggregation (e.g. RME, RSS). This is an issue to be noted for general discussion.

  • Jean-Marc mentioned about an improved RAS procedure whereby certain parts of a matrix can be held constant while other parts are adjusted.

  • Relating to this issue, Karen mentioned that Australian coal exports to Japan, Korea, E_U, for example, could be held constant while adjusting the GTAP-E Data Base.

Services Trade and Protection
Discussion at the board meeting:

Trade in services represented the area with the most new material in this year's board meeting. Wusheng Yu reported on the outcome of a special project, jointly sponsored by the Center and the WTO. A copy of his report on the new trade in services Data Base, co-authored by Mukela Luanga, is available upon request. The most important feature of this report is the new sector breakout of services to cover air and sea transport separately, as well as travel, communications services, financial services and insurance services. Robert McDougall then proceeded to outline the GTAP strategy for incorporating these new data into the version 5 Data Base. In addition, he discussed the new margins information from Mark Gehlhar. When combined with the new disaggregation of the services sector, this offers the prospect of have separate margins for different modes of transport. More detail on the services Data Base project may be obtained by contacting Robert McDougall.

Joe Francois outlined his "wish list" for the services Data Base. He distinguished between analytical issues: linking theory to GATS modes of services delivery, linking barrier estimates to modes, and proper representation of margins and market structure, on the one hand, and data issues: measurement of barriers, expanded sectoral coverage, split of margins, and integrating FDI establishment data, on the other hand. The session concluded with some observations from Mukela Luanga on the role of services in the next WTO round.

Minutes of the sub-committee meeting: A meeting was held on 1999-04-16. Kyle Johnson, Mukela Luanga, Will Martin and Robert McDougall were present.

Will Martin and Kyle Johnson suggested using the gravity model in constructing the services trade data. This could be useful in estimating the pattern of trade between non-reporting countries. We reviewed current work on services data:
  • Aaditya Mattoo at the World Bank is leading a large project, broad in scope, projected to run several years, begun recently. He has updated Hoekman's restrictiveness indices for financial services.

  • Bernard Hoekman is working with Joe Francois on gravity models and protection estimates.

  • Mukela Luanga has added a GATS mode dimension to Hoekman's restrictiveness index data.

  • Chris Findlay, Ray Trewin, and Tony Warren are working on protection data for certain regions. Kyle Johnson reported that he and Michael Ferrantino have a project to model aspects of FDI, in service and other industries, perhaps as a produced good.

Agriculture Discussion
Agriculture is the area where the GTAP Data Base currently provides the greatest sectoral detail. We do not envision further disaggregation of these sectors. Attention has now turned to three areas: quality of the inter-industry linkages in the food sector, improvements in the protection Data Base, and improved coverage of primary factors in agriculture.

The IO linkages for food are based heavily on the work of Everett Peterson for the version 4 Data Base. Further improvements are possible with added information and Roy Darwin plans to pursue this with Everett.

In version 5, we hope to rely on an independent effort to assemble agricultural protection data in support of the Uruguay Round. This is being led by ERS/USDA, UNCTAD, Agriculture Canada and the OECD.

In depth discussion of improved coverage of primary factors was deferred to the agricultural committee meeting (see below).

Sub-committee meeting
Members of the Agriculture and Natural Resources Committee for the GTAP Advisory Board met on April 16, following the official board meeting. The main topic of discussion was expanding GTAP's ability to simulate changes in land and water resources. The major points made during the discussion are as follows:
  • Disaggregating land by ecological zone and adding land to all economic sectors will improve GTAP's supply response for agricultural products. This will in turn produce more reliable measures of economic welfare. It will also increase the number of potential applications in topical areas where land-use and/or cover change is a major issue, i.e., global changes affecting long-term agricultural and environmental sustainability.

  • The U.S. Department of Agriculture's Economic Research Service (ERS) has a prototype database and model with disaggregated land compatible with the earliest version of GTAP called the Future Agricultural Resources Model (FARM). ERS currently plans to revise FARM's land and water resources database to be compatible with GTAP V5.

  • ERS plans to provide a separate database and model to the GTAP Consortium when the revisions are complete and fully documented. The model structure will retain input separability across crops. The expected date of completion is uncertain at present.

  • FARM revisions will be planned so that any overlapping results can be included in GTAP V5. The most likely areas of overlap concern the agricultural, forestry, water, and dwellings sectors in the input/outpt tables. Hence, ERS plans to work closely with Everett Peterson, Frank von Tongeren, and others involved in producing the GTAP V5 Data Base.



Goals for the Coming Year
  1. Disaggregation of the services sectors in GTAP.
  2. Comprehensive evaluation of the DOE energy project and incorporation into the main build-stream of GTAP, as appropriate.
  3. Implement new management plan for the Data Base and preliminary release of version five by March 1.
  4. Validation of the GTAP Model in conjunction with a back-casting exercise aimed at estimation of trade elasticities for the standard GTAP Model.
  5. Successful delivery of a series of six preparatory modules for some of the participants in the August GTAP short course.
  6. Another successful short course to be held in August at Purdue University.
  7. A successful 2nd Annual Conference in Global Economic Analysis.
  8. GTAP support for outreach efforts aimed at building capacity to analyze trade policy in developing countries particularly in Africa.
  9. Development of new distance learning modules on advanced topics, including: imperfect competition, trade and the environment, and conducting projections with GTAP. These may be offered as follow-up options for individuals who have completed the short course, but which to obtain more in-depth training on specialized issues.
  10. The addition of 3 - 5 more Technical Papers on the website.
  11. The addition of a post-doc at the Center in order to provide better support for, and increased professionalization of, the new Data Base strategy.


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