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GTAP Resource #1707

"Mini-USAGE : reducing barriers to entry in dynamic CGE modelling"
by Rimmer, Maureen and Peter Dixon


Abstract
Objectives:

USAGE (U.S. Applied General Equilibrium) is a dynamic computable general equilibrium model of the United States. It is based on the MONASH model of Australia which has been applied widely in forecasting, policy analysis, estimation of technological trends and analysis of historical events. USAGE has many special features and is normally run with about 500 industries.

The detail included in USAGE and earlier MONASH-style models is important for practical, policy-oriented analyses. However, the detail means that comprehensive documentation is necessarily voluminous. While this documentation is essential for keeping track of theoretical and empirical details, it is not ideal for disseminating the principal ideas in the models or the techniques involved in building and applying them.

This paper sets out a miniature version of the USAGE model, Mini-USAGE. Our aim in creating Mini-USAGE is to reduce barriers to entry into the world of MONASH-style dynamic general equilibrium modelling.


Methodology:

We specify and implement Mini-USAGE. This model has the only 5 industries, allowing its entire database to be set out on a couple of pages and simulations to be run in a few seconds. While the miniature model strips away many details, it retains the main theoretical features of full-scale MONASH-style models including: physical capital accumulation, rate-of-return-sensitive investment, foreign debt accumulation and the balance of payments, and lagged wage responses to labour market conditions.

As with full-scale MONASH-style models, the miniature model is being developed to run with 4 basic closures. With these closures Mini-USAGE will produce: estimates of changes in technologies and consumer preferences (historical closure); explanations of historical developments such as rapid growth international trade (decomposition closure); forecasts for industries, regions, occupations and households (forecast closure); and projections of the deviations from forecast paths that would be caused by the implementation of proposed policies and by other shocks to the economic environment (policy closure).

Data:

The data underlying Mini-USAGE is a simplified, aggregated database from our 500-industry MONASH-style U.S. model, USAGE.

Anticipated findings:

Detail is important for practical policy-oriented economic modelling. However, it is not easy to read and absorb. Often it seems easier to create it than to read about it. In any case, the empirical and theoretical details relevant for modelling one country may not be relevant for another. By providing Mini-USAGE we hope to give modellers a tool for understanding the theory, construction and computing of MONASH-style models and for interpreting results. For this purpose, Mini-USAGE is unencumbered by detail. We hope that Mini-USAGE will, for some modellers, be a useful skeleton onto which they can graft their own detail.




Resource Details (Export Citation) GTAP Keywords
Category: 2005 Conference Paper
Status: Published
By/In: Presented at the 8th Annual Conference on Global Economic Analysis, Lübeck, Germany
Date: 2005
Version:
Created: Rimmer, M. (4/28/2005)
Updated: Rimmer, M. (5/23/2005)
Visits: 1,809
No keywords have been specified.


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