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GTAP Resource #1225

"Interpretation of Macroeconomic Results from a CGE Model such as GTAP"
by Adams, Philip

There are four basic tasks in model-based analysis:
1. derivation of the model's theoretical structure;
2. calibration;
3. simulation design and solving; and
4. interpretation of results.
This paper deals with the fourth task – interpretation.

Interpretation is about explaining in a logical sequence the projections from a model. At each point in a properly constructed sequence of explanation, results are rationalized drawing (wherever possible) on: results explained earlier, and/or values in the calibrated database, and/or aspects of the underlying theory. Proper interpretation assists in the checking of the model’s implementation. It also enhances the credibility of the analysis and provides economic insights that are not obvious from a casual inspection of the results.

The interpretation of results in terms of a logical sequence of connections is not easy, and is often made more arduous by a requirement that economists not familiar with details of the model readily understand the interpretation. The objective of this paper is to outline a general strategy for interpreting macroeconomic results from a CGE model such as GTAP. A general strategy is useful because it is always available as a starting point, and is often suggestive of more detailed, simulation-specific interpretations.

At the core of our general strategy is a model of the model. Stylised models assist in identifying the principal theoretical mechanisms that underlie the projections from the full model. They also aid in highlighting the important elements of the database.

In the penultimate section of the paper, the power of the general strategy is demonstrated with an application to a GTAP simulation of the effects of APEC trade liberalisation.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2003 Conference Paper
Status: Published
By/In: Presented at the 6th Annual Conference on Global Economic Analysis, The Hague, The Netherlands
Date: 2003
Created: Adams, P. (4/25/2003)
Updated: Bacou, M. (9/27/2003)
Visits: 2,914
- Calibration and parameter estimation

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