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GTAP Resource #2358

"The effects of consumer demand parameters on trade policy analysis: An application to the World Bank Linkage model."
by Sahin, Sebnem and Dominique van der Mensbrugghe


Abstract
This paper discusses the significance of the specification of consumer demand in a global trade, computable general equilibrium (CGE) model: the World Bank’s Linkage CGE model.
First, the effects of various global trade policy reforms are re-estimated using alternative consumption specifications (e.g., CDE, AIDADS, LES, etc.) in the CGE model.
Second, newly estimated income and price elasticities based on the United Nations’ consumption (COICOP) data are integrated into the consumption specification.
In order to improve the modeling of the link between consumer and producer goods, a transition matrix, based on GTAP–COICOP concordance tables is incorporated into the CGE model.
The concordance between the COICOP and GTAP consumption data was established through CPC 1.0 database for all sectors except services (GTAP sectors: 1 to 44). COICOP consumption data was first converted to CPC at the most disaggregated level (43 categories), then to the GTAP6 (57 sector/good) formulation.
Due to the absence of a direct mapping between the CPC and GTAP databases concerning services (GTAP sectors: 45 to 57), one intermediary step was necessary. The COICOP dataset was first converted to CPC, then to ISIC and finally to GTAP6 data classification (Figure 3). As in the previous section, COICOP - CPC mapping is established, first, at the most detailed country and sector desegregation level, then converted into GTAP6 format. Using these conversion techniques, a full mapping was established between COICOP and GTAP6 data. The transition matrix combines data on consumption by purpose (COICOP in columns) which is disaggregated into demand for production activities (GTAP in lines).
These improvements lead:
- To a more satisfactory modeling of the links between consumption and supply.
- To an improved formulation of individual consumption demands (more detailed product classification and more emphasis on services).
- To improve dynamic properties of consumer demand specification.


Resource Details (Export Citation) GTAP Keywords
Category: 2007 Conference Paper
Status: Published
By/In: Presented at the 10th Annual Conference on Global Economic Analysis, Purdue University, USA
Date: 2007
Version: PRELIMINARY
Created: Sahin, S. (4/13/2007)
Updated: Sahin, S. (4/13/2007)
Visits: 2,972
- Calibration and parameter estimation
- The GTAP Data Base and extensions


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