Deriving a Global Social Accounting Matrix from GTAP version 5 Data

This paper reports a method for converting version 5 of the GTAP database into a global SAM that is stored in GAMS data exchange (GDX) format or in a Header Array (HAR) format. The focus of attention is on the generation of a SAM representation of the GTAP database that is fully consistent with the GTAP model; as such the resultant SAM can be readily used to calibrate a version of the GTAP model that had been coded in GAMS. The GAMS code used to generate the SAM representation of the GTAP database is provided as a GAMS model library – this code has been tested with versions 5.0 and 5.3 of the GTAP database

Impact of Switching Production to Bioenergy Crops: The Switchgrass Example January 2005

This paper reports the results of a series of simulations that evaluate the general equilibrium effects of substituting crude oil by biomass, specifically switchgrass, in the production of petroleum in the USA. The simulations are inspired by debates over the implications for developing countries if agricultural policies in the USA are changed so that agricultural land is transferred from the production of cereals and other crops to biomass production. The results confirm expectations that such a policy shift would raise cereal and other agricultural prices, due to a general reduction in food production in the USA. However, the reduction in the demand for crude oil in the USA causes terms of trade effects that more than offset any potential benefits for developing countries due to the depreciation of their exchange rates, causing a general decline in economic welfare. Moreover, the declines in welfare are proportionately greater for developing countries due to their small levels of production of the commodities whose prices increase with the change in USA agricultural production

Trade liberalization and regional integration: the search for large numbers

The debate over the impact of regional trade agreements (RTAs) on world welfare hinges upon (1) whether they are net trade creating or trade diverting and (2) whether they impede multilateral trade liberalization. Theoretical models are ambiguous on these issues. We summarize the insights from the vast body of empirical literature on multi-country CGE models which analyze RTAs. The empirical models overwhelmingly show that aggregate trade creation dominates trade diversion. Indeed, in many cases, there is no absolute aggregate trade diversion from an RTA. The models also indicate that welfare for all members — both current and potential — increases when RTAs expand. There are even bigger welfare gains when models incorporate aspects of “new trade theory” such as increasing returns, imperfect competition, technology transfers, trade externalities, and dynamic effects such as links between trade liberalization, total factor productivity growth, and capital stock accumulation. We broaden the search for large numbers by suggesting an additional gain from RTAs. We conjecture that increases in intra-sectoral trade arise from the fact that an RTA provides an expanded secure market, and permits firms to pursue economies of fine specialization. This Smithian specialization in production is another source of efficiency gains.Trade liberalization Econometric models., Trade policy Econometric models., Regional economics., Welfare economics.,

Trade and the skilled-unskilled wage gap in a model with differentiated goods

"There is a continuing debate about the role of changes in trade on the evolution of relative wages particularly the skilled-unskilled wage gap. In the 1980's, the wage gap widened considerably in the United States, and there was an active literature on the roles of trade, technology, and changes in labor supplies, particularly due to migration and education, in explaining these changes. The empirical models used to analyze the links fall into two broad groups: (1) partial-equilibrium models of the labor market, focusing on changes in the supply and demand of labor by skill category, and (2) general equilibrium trade models linking domestic factor returns to changes in world prices and the composition of trade....In this paper, we present a theoretical model that can capture many of the differences between the approaches of trade and labor economists." from Authors' Introduction.Equilibrium (Economics) Models ,

Trade liberalisation and regional integration: the search for large numbers

We surveyed the empirical literature using multi-country computable general equilibrium (CGE) models to analyse potential and actual regional trade agreements (RTAs). The studies indicate that these RTAs improve welfare, that trade creation greatly exceeds trade diversion, and that they are consistent with further global liberalisation. The welfare gains are bigger when models incorporate aspects of ‘‘new trade theory’’ such as increasing returns, imperfect competition, and links between trade liberalisation, total factor productivity growth, and capital accumulation. We also conjectured that an RTA expands market size and stability, allowing firms to pursue economies of fine specialisation, generating additional ‘‘Smithian’’ efficiency gains.International Relations/Trade,

Numerical relativity simulations of binary neutron stars

We present a new numerical relativity code designed for simulations of compact binaries involving matter. The code is an upgrade of the BAM code to include general relativistic hydrodynamics and implements state-of-the-art high-resolution-shock-capturing schemes on a hierarchy of mesh refined Cartesian grids with moving boxes. We test and validate the code in a series of standard experiments involving single neutron star spacetimes. We present test evolutions of quasi-equilibrium equal-mass irrotational binary neutron star configurations in quasi-circular orbits which describe the late inspiral to merger phases. Neutron star matter is modeled as a zero-temperature fluid; thermal effects can be included by means of a simple ideal-gas prescription. We analyze the impact that the use of different values of damping parameter in the Gamma-driver shift condition has on the dynamics of the system. The use of different reconstruction schemes and their impact in the post-merger dynamics is investigated. We compute and characterize the gravitational radiation emitted by the system. Self-convergence of the waves is tested, and we consistently estimate error-bars on the numerically generated waveforms in the inspiral phase

A note on taxes, prices, wages, and welfare in general equilibirium models:

Changes in real wages are often used to measure welfare changes. There is a problem, however, in interpreting measures of changes in factor returns when analyzing the impact of changes in taxes — such as tariffs and indirect taxes — that operate as wedges in product and factor markets versus direct taxes that do not work through the price system. One must account for both how the tax is collected and where the tax revenue goes. We sort out how a shift in tax structure will affect the real wage in a model which isolates the price, wage, revenue, and welfare effects. We start from a simple general equilibrium model which accounts for all income and expenditure flows in the economy and includes both traded and domestic goods. We analyze the impact of changes in indirect taxes and tariffs on prices and factor income and demonstrate the pitfalls of using real factor returns as a welfare indicator. There is a transfer effect on factor returns arising from any shift between indirect and direct taxes, regardless of any efficiency effects. Next, we add explicit factor markets to the model and describe the implications for income distribution in an extension of the Jones trade model. We find that the transfer effect dampens the magnification effect of a price change on factor returns, but does not reverse the Stolper-Samuelson results.Trade policy., Welfare economics., Equilibrium (Economics).,

A SAM Based Global CGE Model using GTAP Data January 2005

This paper provides a technical description of a global computable general equilibrium (CGE) model that is calibrated from a Social Accounting Matrix (SAM) representation of the Global Trade Analysis Project (GTAP) database. A distinctive feature of the model is the treatment of nominal and real exchange rates and hence the specification of multiple numéraire

Trade and tradability

We extend the Salter-Swan model to include both factor markets and semi-traded goods. In our model, changes in relative factor prices depend on changes in world commodity prices, factor endowments, and the trade balance. In contrast, only changes in world commodity prices can affect factor prices in the neoclassical trade model. The inclusion of semi-traded goods weakens the magnification effect of both the Stolper-Samuelson and Rybczynski theorems. When imports and domestic goods are poor substitutes, a characteristic of some commodities in developing countries, the sign of the Stolper-Samuelson effect is reversed. Authors' Abstract.Exports. ,Imports. ,Trade. ,Commerce Mathematical models. ,

Globe: A SAM Based Global CGE Model using GTAP Data

This paper provides a technical description of a global computable general equilibrium (CGE) model that is calibrated from a Social Accounting Matrix (SAM) representation of the Global Trade Analysis Project (GTAP) database. An important feature of the model is the treatment of nominal and real exchange rates and hence the specification of multiple numéraire. Another distinctive feature of the model is the use of a ‘dummy’ region, known as globe, that allows for the recording of inter regional transactions where either the source or destination are not identified.