3.2 GTAP
GTAP (Global Trade Analysis Project) is a large CGE model developed at Purdue University and used widely around the world. It is a multi-regional model that includes households, producers, and government for each region, interactions between the regions, and global savings.
For this report, the GTAP version 7.0 database is used. This database (the most recent available at time of writing) collates data for 57 production sectors in each of the 113 regions of the world, adjusted to make a consistent data set for 2004. This has then been aggregated to 19 sectors in 27 regions (as listed in the Appendix) so that it is more manageable. The model is closed by fixing the quantity of land, labour, capital, and natural resources; all prices and other quantities in the model can change.
The GTAP model has regional "households" (one per region) that aggregate taxes then distribute income within the region for savings and spending. These are different to private households, which receive money from the regional household for spending on taxes and purchases. Income comes from producers in the value-added they receive from capital, labour, and agricultural land. It also comes from taxes paid by private households, governments (as consumption taxes), producers, and other regions (import and export duties). Subsidies are treated as negative taxes. The income is then distributed (in approximately constant proportions) to government and private household for expenditure, and to global savings.
Private households and government both use their funds to purchase goods and services both from the producers in their own region and from other regions. Producers also sell their products to the savings sector as investment goods, to other producers as intermediate goods, and import from and export to other regions. Each production sector has exactly one output. A diagram of the GTAP model is given in Figure 2 (adapted from (Brockmeier, 2001)).
- Figure 2 - The GTAP CGE model
Further information on the GTAP model and the full technical documentation can be found on the GTAP website www.gtap.org
