Authors: Peter B. Dixon and Maureen T. Rimmer
We conduct an historical simulation from 2004 to 2014 with a 57-commodity, 13-region version of the GTAP model. The simulation generates estimates of changes in industry technologies, household preferences and several other unobservable variables by calculating the changes required to connect GTAP databases for the two years.
The historical simulation starts from the 2004 database and then in a single-period (10-year) computation produces a picture of 2014. We require this picture to be consistent with a large number of data points in the GTAP database for 2014 and with data on a selection of other variables brought in from non-GTAP sources.
The GTAP data are entirely in values. The non-GTAP sources provide movements between 2004 and 2014 in quantity variables. The combination of exogenously set GTAP value targets for 2014 and non-GTAP quantity targets enables the historical simulation to generate a comprehensive set of price movements for 2004 to 2014. Simultaneously, the historical simulation translates commodity and industry value movements into quantity movements. With input and output quantity movements in place, technology and preference movements are revealed.
JEL classification: C68; C52; D24
Keywords: GTAP historical simulation; Industry technologies; Household preferences
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