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GTAP Resources: Resource Display

GTAP Resource #3348

"Using Macro Indicators for Consistent CGE Baseline Construction"
by Ferrari, Emanuele, Marc Mueller and Aida Gonzalez–Mellado


Abstract
Many policy targets are set in a way that their implementation will not take place immediately but rather at some time in the future. In this case, quantitative policy analysts are confronted with the problem to compile a base-line scenario that reflects the most likely state of the economy in the year of interest. The methods employed to derive the base-line scenarios are heterogeneous and range from the usage of the last observable year to complete and consistent estimation procedures. In the case of general equilibrium (CGE) analyses, the Scenar2020 project (European Commission 2006a) is one example how projections of macro-economic indicators (exogenous drivers) are used to construct the base-line as a model scenario: Starting from a calibrated version, exogenous variables are modified until macro-economic projections are met. However, numerous projections refer to economic indicators which are endogenous variables within the CGE framework, such as gross domestic product (GDP), market prices, or produced quantities. To investigate methods that allow integrating projections for endogenous CGE variables is the main topic of this study. A starting point is the work by Arndt et al (2002), where entropy-based (Golan et al 1996) techniques are employed for the estimation of behavioural parameters by fitting a CGE model to time series on endogenous variables. Following this concept, we apply a method to fit a CGE´s parameters and endogenous variables to market- and macro-economic projections from major research institutes. The original model is calibrated for the year 2000 for selected Member States of the EU, and the estimation is based on and tested against available observations for 2005.


Resource Details (Export Citation) GTAP Keywords
Category: 2010 Conference Paper
Status: Published
By/In: Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia
Date: 2010
Version:
Created: Ferrari, E. (4/15/2010)
Updated: Ferrari, E. (7/15/2010)
Visits: 1,481
- Calibration and parameter estimation
- Baseline development
- European Union


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