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GTAP Resource #4191

"Diagrammatic Back of the Envelope (BOTE) Model for One Country Two Factors and Four Commodities (124) with Illustrations from full Ethiopia CGE model and Showing HOS Origin and 123 Alternative"
by Evans, H. David and Niyati Ghelani


Abstract
Typically, a single country Computable General Equilibrium (CGE) model has a large number of sectors, factors and households. Many country CGE modellers use the well-known PRSP123 model (Devarajan and Go, 2003) miniature model with one country, two factors and three goods to explain the analytical structure of the larger country CGE model. Unfortunately, the PRSP123 model does not reflect the empirical realities of most single countries being modelled because it excludes non-tradable goods. The large SAM-based CGE model of Ethiopia reported in section 3 has over 30% of output that is non-tradable measured by all of the definitions of non-tradable tested (see Ahmad et al 2010).

The central sections of this paper sketch the maths and the diagrams of a Back of the Envelope (BOTE) 124 model with one country, two factors and four goods. Many of the diagrams are three-dimensional which are less familiar to some readers. However, the key diagrams can be reduced to a more familiar 2-dimensionals. In addition, the standard Heckscher-Ohlin-Samuelson (HOS) model can be illustrated as a 2-dimensional version of the BOTE 124 model, which is where CGE modellers began in the early 1970s when faced with the drive towards complete specialisation in standard trade models. See Evans (1972) on Ricardian models and Dixon et al (1977, 1982) who was the first CGE modeller to use Armington functions in a standard HOS model.


Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Version:
Created: Evans, H. (4/15/2013)
Updated: Batta, G. (6/4/2013)
Visits: 922
- Economic analysis of poverty
- Economic crisis
- Economic growth
- Africa (East)


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