GTAP-AGR: A Framework for Assessing the Implications of Multilateral Changes in Agricultural Policies

By R. Keeney, Thomas W. Hertel. GTAP Technical Paper Series, 2005

188 citations recorded by the source corpus.

Global models of agricultural trade have a long and distinguished history. The introduction of the GTAP data base and modeling project represented a significant advance forward as it put modelers and trade policy analysts on common ground. After an initial generation of GTAP based modeling of agricultural trade policy using the standard modeling framework, individual researchers have begun introducing agricultural specificity into the standard modeling framework in order to better capture the particular features of the agricultural economy pertinent to their research questions. This technical paper follows in that same tradition by reviewing important linkages between international trade and the farm and food economy and introducing them into the standard GTAP modeling framework, offering a special purpose version of the model nicknamed GTAP-AGR. We introduce this agricultural specificity by introducing new behavioral relationships into the standard GTAP framework. We focus particular attention on the factor markets, which play a critical role in determining the incidence of producer subsidies. This includes modifying both the factor supply and derived demand equations. We also modify the specification of consumer demand, assuming separability of food from non-food commodities. Finally, we introduce the important substitution possibilities amongst feedstuffs used in the livestock sector. Where possible we support these new behavioral relationships with literature-based estimates of both the mean and standard deviation of behavioral parameters. The express purpose of this is to support systematic sensitivity analysis with respect to policy reform scenarios performed with GTAP-AGR. In addition to documenting these extensions to the standard modeling framework, the paper has an additional goal, and that is to gauge the performance of the GTAP-AGR model and how it differs from the standard GTAP framework. We do this primarily by comparing the farm level supply and demand response in terms of policy incidence for the two frameworks. In addition, we evaluate the ability of both models to reproduce observed price volatility in an effort to validate the performance of these models. Finally, we evaluate the results of the two models in a side-by-side comparison of results from full liberalization of agricultural and non-agricultural support.

Subfields: Economics and Econometrics, General Agricultural and Biological Sciences

View Paper: https://www.semanticscholar.org/paper/3c99177743c4ed9bacaac7e35a78320325758006

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Citations in the corpus

Biofuels and their By-Products: Global Economic and Environmental Implications (2010, methodology): “Given these assumptions and following Keeney and Hertel [14] for the general approach to introducing feedstuff substitution in livestock production within the GTAP framework, we define a nested demand structure for feed in the livestock sectors of the model.”
Fighting global food price rises in the developing world: the response of China and its effect on domestic and world markets (2008, methodology): “To model this, we segment capital and labor markets by specifying a CET structure that constrains labor–capital substitutability (Keeney and Hertel, 2005).”
The Long-Run Impact of Energy Prices on World Agricultural Markets: The Role of Macro-Economic Linkages (2009, methodology): “We depart from this textbook version by developing more relevant specifications for the agricultural sectors (following the GTAP-AGR specifications described in Keeney and Hertel, 2005) and for the energy sectors (following the GTAP-E specifications described in Burniaux and Truong, 2002).”
Will EU biofuel policies affect global agricultural markets (2008, background): “Factor market segmentation is introduced by specifying a CET structure that transforms agricultural labor (and capital) into non-agricultural labor (and capital) (Keeney and Hertel, 2005).”
The Poverty Implications of Climate-Induced Crop Yield Changes by 2030 (2010, background): “In our model, these elasticities are based on econometric studies of agricultural supply and demand (Keeney and Hertel, 2005).”
Validating Energy-Oriented CGE Models (2009, methodology): “11 In a recent example of using GE elasticities to compare the performance of a CGE model, Keeney and Hertel (2005) calculate and compare these elasticities for agricultural commodities for the U.S. and Canada in their GTAP-AGR framework.”
Indirect Land Use Change From Increased Biofuels Demand - Comparison of Models and Results for Marginal Biofuels Production from Different Feedstocks (2010, methodology): “The model version used for this study is LEITAP2 (an extended version of the original LEITAP1), which uses the carbon market and the rough characteristics of the production structure of the energyvariant of GTAP, GTAP-E (Burniaux and Truong, 2001; Truong, 2007), the international capital flow accoun”
Sit down at the ball game: how trade barriers make the world less food secure (2011, methodology): “…agriculture, we extend the standard GTAP model by adding a more elaborate two-level nested constant elasticity of substitution (CES) production structure, which allows for (imperfect) substitution between and within value added and intermediate inputs, drawn from GTAP-AGR (Keeney and Hertel, 2005).”
The relative importance of global agricultural subsidies and market access (2006, methodology): “As shown by Martin (1997), the welfare impacts generated by CGE models can be identified with the traditional partial equilibrium Harberger welfare triangles of waste in production and consumption.”