Removing border protection on wheat and rice: effects on rural income and food self-sufficiency in China *

In this paper, I use the Monash Multi-Country model - a dynamic Computable General Equilibrium model of China, Australia and the Rest of the World - to analyse the effects of removing border protection on wheat and rice in China. The analysis points to the possibility that removing border protection on wheat and rice may lead to an increase in rural income in China. This is mainly due to the following two factors. First, removing border protection on wheat and rice not only leads to a contraction in agricultural activities, but also leads to an expansion in manufacturing and services activities. Second, on average, rural households in China obtain over half of their income from manufacturing and services activities. Copyright 2008 The Author. Journal compilation 2008 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd.

Analysing convergence with a multi-country computable general equilibrium model: PPP Versus MER

In studies of the greenhouse gas implications of convergence by developing countries to the per-capita GNPs of developed countries, considerable discussion has centred on whether purchasing power parity (PPP) or market exchange rates (MER) should be used in measuring per-capita GNPs. We suggest that technology gaps between developing and developed countries should be the starting point for convergence analysis rather than per-capita GNP gaps. We estimate two sets of initial technology gaps, using PPP and MER price assumptions combined with input-output data. In simulating the effects of closing technology gaps (convergence) using a dynamic, multi-country CGE model, we find:(1) the MER/PPP distinction matters. MER-based estimates of initial technology gaps lead to higher estimates of convergence-induced growth in greenhouse-gas-emitting industries in developing countries than do PPP-based estimates.(2) the industry detail in CGE models is valuable. Our simulations show a wide range of convergence-induced changes in output across industries

Assessing Global Computable General Equilibrium Model Validity Using Agricultural Price Volatility

Computable General Equilibrium (CGE) models are commonly used for global agricultural market analysis. Concerns are sometimes raised, however, about the quality of their output since key parameters may not be econometrically estimated and little emphasis is generally given to model assessment. This article addresses the latter issue by developing an approach to validating CGE models based on the ability to reproduce observed price volatility in agricultural markets. We show how patterns in the deviations between model predictions and validation criteria can be used to identify the weak points of a model and guide development of improved specifications with firmer empirical foundations. Copyright 2007, Oxford University Press.

The Economy‐wide Impacts and Risks of Malawi's Farm Input Subsidy Program

Program evaluations often overlook economywide spillovers and constraints. We estimate the impact of Malawi’s Farm Input Subsidy Program using a computable general equilibrium model informed by household-level studies. We find that indirect benefits account for about two-fifths of total benefits, underscoring the complementarity between economywide and survey-based program evaluations. Benefit-cost ratios fall when domestic taxes finance the program or when real fertilizer prices rise. Abstracting from very strong weather events, we find that Malawi’s program potentially generates double-dividends in the form of higher and more drought-resilient yields. Overall, using parameters similar to survey-based evaluations, we identify mostly positive economywide returns over a range of program designs and risks. However, similar to earlier evaluations, benefit-cost ratios depend strongly on assumptions about fertilizer dose-response rates; and the dose-response rates from ex post survey-based studies generate benefit-cost ratios less than one even when indirect program benefits are included

GM crop technology and trade restraints: economic implications for Australia and New Zealand

How much might the potential economic benefit from enhanced farm productivity associated with crop biotechnology adoption by Australia and New Zealand (ANZ) be offset by a loss of market access abroad for crops that may contain genetically modified (GM) organisms? This paper uses the Global Trade Analysis Project (GTAP) model to estimate effects of other countries' GM policies without and with ANZ farmers adopting GM varieties of various grains and oilseeds. The gross economic benefits to ANZ from adopting GM crops under a variety of scenarios could be positive even if the strict controls on imports from GM-adopting countries by the European Union are maintained, but not if North-East Asia also applied such trade restaints. From those gross economic effects would need to be subtracted society's evaluation of any new food safety concerns and negative environmental externalities (net of any new environmental and occupational health benefits), as well as any extra costs of segregation, identity preservation and consumer search. Copyright 2005 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.