Agriculture Reference
In-Depth Information
The model does not have an exchange rate variable; however, by
choosng as a
numeraire
the index of global factor prices, each region's
change of factor prces relatve to the
numeraire
directly reflects a change
n the purchasng power of the regon's factor ncomes on the world market.
Ths change can be nterpreted drectly as a change n the real exchange
rate. Welfare changes are measured by the equivalent variation, which can
be computed from each regon's household expendture functon.
Taxes and other polcy measures are represented as
ad valorem
tax
equvalents. These create wedges between the undstorted prces and
the polcy-nclusve prces. Producton taxes are placed on ntermedate
or primary inputs, or on output. Trade policy instruments include applied
most-favoured nation tariffs, anti-dumping duties, countervailing duties,
export quotas and other trade restrctons. Addtonal nternal taxes
can be placed on domestic or imported intermediate inputs, and can be
appled at dfferental rates that dscrmnate aganst mports. Taxes could
also be placed on exports and on primary factor income. Finally, where
relevant, taxes are placed on final consumption, and these can be applied
dfferentally to the consumpton of domestc and mported goods.
Data mprovement
The GTAP database contains detailed bilateral trade, transport and protection
data charactersng economc lnkages among regons. Regons are lnked wth
individual country input-output databases, which account for inter-sectoral
linkages among the 57 sectors in each of the 87 regions. The database provides
detailed sectoral classifications for agriculture, with 14 primary agricultural
sectors and seven agrcultural-processng sectors. The base year for the
version used in this study (Version 6) is 2001. For the purpose of the study,
the database has been aggregated into 13 regions and 22 sectors. The regional
and sectoral aggregations are summarised in Tables A13.2 and A13.3.
Before applying the GTAP Version 6, we carefully examined the database
and parameters for Chna and made substantal mprovements n several
aspects related to agricultural input and output ratios, demand parameters,
trade polces and producton values. The man mprovements to GTAP
Version 6 include the following.
