Transcript Events | 2000 Board Meeting | Future Directions

Overview of Dynamic GTAP Model
Terrie L. Walmsley
Model by: Elena Ianchovichina and
Robert A. McDougall
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The Dynamic GTAP Model
Based on standard GTAP Model.
Recursive Dynamic
Accumulation of Capital stocks.
Foreign Capital Ownership.
Disequilibrium theory of
Investment.
Center for Global Trade Analysis, Purdue University
Disequilibrium Approach
Equalisation of rates of return over time.
Problem 1: Implies Perfect Capital Mobility.
Gradual equalisation of rates of return.
Perfect Capital Mobility in long-run only.
Problem 2: Theory and Data - Inconsistent.
Errors in expectations
Center for Global Trade Analysis, Purdue University
Investment Theory
1. Reduction of errors in expectations expected rate of return moves towards
actual rate of return.
2. Gradual movement of rates of return to
equality over time.
3. Gradual equalisation of growth rates
over time to a steady-state rate. This is
required to keep rates of return constant.
Center for Global Trade Analysis, Purdue University
Developing a Common Baseline
Terrie L. Walmsley
and Robert A. McDougall
Last Year’s Meeting
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Many GTAP users are doing Dynamic
modeling and need a baseline scenario
Country Level (Not GTAP regions).
Sharing of data
1990 to 2050. (2100? or pre 1990)
GDP, POP, Consumption, Labor, Skilled
and Unskilled, Investment, Capital,
Protection, Technology, Energy, Savings.
Center for Global Trade Analysis, Purdue University
A Base Case Scenario
1. Period: 1995 to 2020.
2. Macro: GDP, population, Labor,
Skilled and Unskilled labor,
Investment, Capital - 202 Countries.
3. Policy: Uruguay Round, Agreement
on Textiles and Clothing, China’s
Accession, Post-UR tariff reductions
- GTAP regions.
Center for Global Trade Analysis, Purdue University
Macro Data
GDP, Investment and Population
• Yearly, 1992 - 2007, 133 countries, WB.
Total Labor
• 5-yearly, 1990 - 2020, 205 countries, WB.
Skilled Labor
• 5-yearly, 1990 - 2020, 71 developing A&F.
• Single growth rate, 25 developed, WB.
Center for Global Trade Analysis, Purdue University
Macro
Macro
GDP
POP
GDI
Capital
Unskilled
Labor
Skilled
Labor
Aggregate to GTAP
Regions
Center for Global Trade Analysis, Purdue University
• Fill-in missing
countries
• Extrapolate to fill-in
missing years
• Yearly growth rates
for 202 countries
(1995-2020)
• Aggregate to GTAP
regions.
15
1 NAm e ric a
2 WEuro pe
10
3 Aus NZL
4 J a pa n
5 C hina
0
7 OthNIC s
8 Indo ne s ia
-5
10 India
13 OthLa tAm
-10
16 EIT
Tim e
Center for Global Trade Analysis, Purdue University
19
20
16
20
13
20
10
20
07
20
04
20
01
20
98
17 S o AfrC U
19
95
-15
19
Growth in Real GDP
5
19 R OW
1 NAm e ric a
12
2 WEuro pe
10
3 Aus NZL
4 J a pa n
8
6
7 OthNIC s
4
8 Indo ne s ia
10 India
2
13 OthLa tAm
0
16 EIT
17 S o AfrC U
Time
Center for Global Trade Analysis, Purdue University
19
20
16
20
13
20
10
20
07
20
04
20
01
20
98
19
95
-2
19
Growth in Capital
5 C hina
19 R OW
1 NAm e ric a
2.5
2
3 Aus NZL
1.5
4 J a pa n
5 C hina
1
7 OthNIC s
0.5
8 Indo ne s ia
\
10 India
0
13 OthLa tAm
Time
Center for Global Trade Analysis, Purdue University
20
20
17
20
14
20
11
20
08
20
05
20
02
20
99
16 EIT
19
96
-0.5
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Growth in Population
2 WEuro pe
17 S o AfrC U
19 R OW
3
1 NAm e ric a
2.5
2 WEuro pe
Growth in Labor
2
3 Aus NZL
1.5
1
4 J a pa n
0.5
5 C hina
0
7 OthNIC s
-0.5
8 Indo ne s ia
-1
10 India
-1.5
1995- 2000- 2005- 2010- 20152000 2005 2010 2015 2020
T ime
Center for Global Trade Analysis, Purdue University
13 OthLa tAm
17 S o AfrC U
19 R OW
Labor
• Unskilled labor - Currently use
growth in total labor.
• Using difference between total
and skilled labor causes problems
- Developed countries.
Center for Global Trade Analysis, Purdue University
Policy
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Uruguay Round - Francois and Strutt
ATC phase-out (tax equivalents) – GTAP
China’s pre-WTO tariff cuts - Fan and
Zheng
China’s WTO accession - Martin
Taiwan - Av mnfcs tariffs reduced to 4%
Post-UR - tariffs reduced to zero over 20
years
Center for Global Trade Analysis, Purdue University
Policy Shocks
UR and ATC
Agreement (excluding
China and Taiwan)
1995
2000
China’s
preWTO
trade lib
2005
China’s
(Taiwan)
WTO
Accession
Center for Global Trade Analysis, Purdue University
Post-UR Trade Liberalization
2010
2015
2020
Policy Shocks
UR and ATC
Agreement (excluding
China and Taiwan)
1995
2000
China’s
preWTO
trade lib
Post-UR Trade Liberalization
2005
China’s (Taiwan)
WTO Accession
Center for Global Trade Analysis, Purdue University
2010
2015
2020
Policy Shocks
UR and ATC
Agreement (excluding
China and Taiwan)
1995
2000
China’s
preWTO
trade lib
Post-UR Trade Liberalization
2005
2010
China’s
(Taiwan)
WTO
Accession
Center for Global Trade Analysis, Purdue University
2015
2020
Policy Shocks
Policies are implemented so that the
change is the same each year.
Further work on ATC - need to be
back loaded.
Elimination of quotas is treated as a
reduction in export tax equivalents.
Center for Global Trade Analysis, Purdue University
Macro
GDP
POP
GDI
Capital
Unskilled
Labor
Skilled
Labor
Aggregate to GTAP
Regions
Macro
GDP
POP
GDI
Capital
Unskilled
Labor
Skilled
Labor
Aggregate to GTAP
Regions
Adjusted
URTV
Policy
Macro
GDP
POP
GDI
Capital
Unskilled
Labor
Adjusted
URTV
Skilled
Labor
Aggregate to GTAP
Regions
Aggregation Program
Policy
What Now?
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Labor
ATC - back load
New forecasts of macro variables.
Technological change.
*Calibrate
*Growth Accounting
Center for Global Trade Analysis, Purdue University