Project no. 010036
SEAMLESS
System for Environmental and Agricultural Modelling;
Linking European Science and Society
INTEGRATED PROJECT
Global Change and Ecosystems
An introduction to the GTAP database and
model
Marijke Kuiper
Version 3: February 6th, 2008
Project co-funded by the European Commission within the Sixth Framework Programme (2002-2006)
SEAMLESS
No. 010036
An Introduction to the GTAP database and model
Version 3: 6 February 2008
SEAMLESS integrated project aims at developing an integrated framework that allows exante assessment of agricultural and environmental policies and technological innovations.
The framework will have multi-scale capabilities ranging from field and farm to the EU25
and globe; it will be generic, modular and open and using state-of-the art software. The
project is carried out by a consortium of 30 partners, led by Wageningen University (NL).
Email: [email protected]
Internet: www.seamless-ip.org
Authors of this document and contact details
Name:
Marijke Kuiper
Partner acronym: LEI
Address: International Trade and Development, Public Issues Division
LEI-Wageningen UR
PO Box 29703 , 2502 LS, The Hague
E-mail: [email protected]
Disclaimer:
“This publication has been funded under the SEAMLESS integrated project, EU 6th
Framework Programme for Research, Technological Development and Demonstration,
Priority 1.1.6.3. Global Change and Ecosystems (European Commission, DG Research,
contract no. 010036-2. Its content does not represent the official position of the European
Commission and is entirely under the responsibility of the authors.”
"The information in this document is provided as is and no guarantee or warranty is given
that the information is fit for any particular purpose. The user thereof uses the information at
its sole risk and liability."
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SEAMLESS
No. 010036
An Introduction to the GTAP database and model
Version 3: 6 February 2008
Table of contents
Table of contents
3
Summary
5
1
Introduction
7
2
A short introduction to the GTAP database
8
2.1
An outline of the GTAP database
8
2.1.1
Sectors in the GTAP database
9
2.1.2
Regions in different versions of the GTAP database
2.2
3
4
11
Some comments on the GTAP database
14
A short introduction to the GTAP model
15
3.1
What can a GTAP model do?
15
3.2
What does the GTAP model look like?
17
3.3
Some technicalities of the model
18
3.4
Some observations on the GTAP model
18
Installation instructions
20
4.1
Installation instructions
20
4.2
The GTAP Version 4 database
20
References
21
Appendices
21
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SEAMLESS
No. 010036
An Introduction to the GTAP database and model
Version 3: 6 February 2008
Summary
This document aims at providing a first introduction to the GTAP (Global Trade Analysis
Project) model and database. It first shortly describes the GTAP model and database and then
runs through some basic exercises to explore the model and database. This document is
accompanied by a set of files needed for the exercises. There are no license requirements to
use the training material nor do you need to be connected to the internet. For more
information on more elaborate training in GTAP see the GTAP website (www.gtap.org).
Page 5 of 21
LUPIS
No. GOCE-036955
An Introduction to GTAP with hands-on exercises
Version 1: 28 July 2017
1 Introduction
This training document is developed for the second team meeting of the LUPIS project in
Montpellier, January 28th – February 1st, 2008. The aim of the training is to:
-
introduce the GTAP model and database
-
provide tools to explore the database and the model after the meeting
Given the very limited time available at the meeting and the wide variety in professional
background of the team members, the training only aims at introducing the GTAP model in a
way that it is (hopefully) possible to decide for team members if more detailed study of
GTAP is worthwhile for their research interests. This document consists of a short nontechnical introduction to the contents of the GTAP database, the ideas on which the GTAP
model is based and to what kind of uses it is put in policy-oriented research.
In the training we will use the very detailed hands-on training document of Ken Pearson and
Mark Horridge (2005) “Hands-on computing with RunGTAP and WinGEM to introduce
GTAP and GEMPACK” available at www.gtap.org and included in the files used in the
training in Montpellier. This training material of Pearson and Horridge presumes familiarity
with the structure of the GTAP model and database. The non-technical introduction in this
document written for the Montpellier meeting hopefully provides sufficient ground to start
exploring the possibilities of GTAP.
Comments and suggestions on this document are greatly appreciated, in line with the general
GTAP philosophy “if you do not like it, help fix it”. Contact details are provided at the
beginning of this document.
SEAMLESS
No. 010036
An Introduction to the GTAP database and model
Version 3: 6 February 2008
2 A short introduction to the GTAP database
GTAP stands for Global Trade Analysis Project, a global network of researchers and policy
makers conducting quantitative analysis of international policy issues. The key product of the
network is the GTAP database describing the entire economies of 101 countries or regions1 in
terms of 57 sectors, as well as all bilateral trade flows between these regions. This database
forms the basis for a range computable general equilibrium (CGE) models that start from the
same theoretical framework but are adapted to addressing different economic contexts or
research questions. In this chapter we shortly discuss the GTAP database, outline the GTAP
model and provide information on where to get more information and training with the GTAP
model.
The database is the key asset of the GTAP-network. It provides a wealth of macro-economic
information which can only be compiled through a common effort of a network of
organizations and individuals. The database is constructed by the GTAP Centre located at the
Department of Agricultural Economics at Purdue University, USA. Sales of the database are
used to finance next releases of the database, allowing continuous updating of the data. For
this training we use Version 4 of the database which describes the world economy in 1995
and has been made freely available at the website. Discounts of the most recent GTAP
database (Version 7 with baseyear 2004 will be released in 2008) are available for users in
developing countries (see www.gtap.org for more details).
2.1 An outline of the GTAP database
The GTAP database describes the world economy in a specific year. It is aimed to be used for
computable general equilibrium (CGE) analysis which implies that the data should describe
all cash transactions in an economy. It therefore covers all production of agriculture, natural
resource extraction, industry and services, consumption of these goods and services by
private households and the government as well as taxes and subsidies (both domestically and
charged on imports and exports). This description of production, consumption and taxes is
done for each of the regions in the database, to provide a complete picture of these
economies. We will return to a discussion of these regions below.
Describing each of the regions in the world is not enough to completely describe the world
economy. The database also includes all bilateral trade flows between the regions of the
world. In other words for each of the sectors in the model (see the discussion below of the
sectors in GTAP) the database contains information on how much region A is importing from
regions A through Z. In addition to trade in goods the database also includes rudimentary data
on global capital flows.
The description of the economies of the regions together with the description of all global
trade flows provides a complete description of the world economy in a specific year (the base
year).
1
The number of regions in the database is increasing with every release as regional aggregates are split
in individual countries when the necessary data are contributed to the GTAP network. The next release
(version 7) is expected to have 104 countries/regions.
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No. 010036
An Introduction to the GTAP database and model
Version 3: 6 February 2008
2.1.1 Sectors in the GTAP database
The GTAP database divides the economy in 57 sectors (table 2.1). The agricultural (sector 1
to 12) and food processing sectors (sector 19 to 26) are defined on the basis of the Central
Product Classification (CPC). The CPC was developed by the Statistical Office of the United
Nations to bridge different sectoral classifications (UN 1990, 1991). The other GTAP sectors
are using the International Standard Industry Classification (ISIC). The ISIC does not provide
the required detail for agriculture and food processing, hence the use of the CPC.
Table 2.1 indicates that in Version 4 used in this training less sectors are available than in the
more recent GTAP versions (Version 5 to 7). The sectors forestry, coal and several services
sectors are not distinguished in Version 4. Since all databases are covering the entire
economy, less sectors in Version 4 implies that the data of these sectors are covered in other
sectors. Values of sectors can thus not be directly compared when moving from Version 4 to
the other versions.
A second reason preventing a direct comparison between the numbers in versions is that
although each version uses numbers in millions of US dollars, the dollar value is linked
specifically to the base year. Thus, all numbers in Version 4 refer to values in millions of
1995 US dollars, whereas Version 7 will refer to values in millions of 2004 US dollars. To
compare between versions one needs to account for inflation.
As is custom in the economic CGE models the GTAP database measures the economy in
monetary terms only. The value of production of paddy rice, for example, provided in the
database thus refers to the production measured in US dollars and does not provide any
indication of the production level in terms of tons of paddy rice. This also holds for the
factors of production (land, labour and capital) goods that are also measured in monetary
terms without any way of deriving the amount of available land in terms of hectares or labour
in terms of person months.
When a CGE model is developed based on a dataset like the GTAP data all prices are set to 1
in the base year. Quantities are then imputed by dividing the data in monetary terms by 1.
This implies that all results of model simulations cannot be directly related to actual numbers
but only in relation to the base year values. Therefore most results of CGE models are
presented in percentage terms, relative to the base year results.
There is no technical reason for not having for example land measured in hectares instead of
in dollars. Several of such models are developed but do require additional data not supplied
with the standard GTAP dataset. In fact this issue was found to be essential for assessments
of climate change that a (free) dataset has been developed which describes the use of
agricultural land by agro-ecological zones in a manner compatible with the GTAP Version 6
dataset (Lee et al., 2005). To allow modelling of international migration flows similar efforts
are made to develop a database of migrants.
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No. 010036
An Introduction to the GTAP database and model
Version 3: 6 February 2008
Table 2.1: List of GTAP sectors
Code
Description
V4


V5V7


Code
Description
1
2
PDR
WHT
Paddy rice
Wheat
3
GRO
Cereal grains nec

4
V_F
Vegetables, fruit,
nuts
Oil seeds
Sugar cane, sugar
beet
Plant-based fibers
Crops nec
Bovine cattle, sheep
and goats, horses
Animal products
nec
Raw milk
5
6
OSD
C_B
7
8
9
PFB
OCR
CTL
10
OAP
11
RMK
12
WOL
13
14
15
FRS
FSH
COA
16
17
18
19
OIL
GAS
OMN
CMT
20
21
OMT
VOL
22
23
V4
30
31
LUM
PPP



32
P_C




33
CRP






34
35
NMM
I_S
Wood products
Paper products,
publishing
Petroleum, coal
products
Chemical, rubber,
plastic products
Mineral products nec
Ferrous metals
V5V7












36
37
38
NFM
FMP
MVH








39
OTN




40
ELE


Wool, silk-worm
cocoons
Forestry
Fishing
Coal


41
OME








42
43
44
OMF
ELY
GDT














45
46
47
48
WTR
CNS
TRD
OTP












49
50
WTP
ATP
Water transport
Air transport




MIL
PCR
Oil
Gas
Minerals nec
Bovine meat
products
Meat products nec
Vegetable oils and
fats
Dairy products
Processed rice
Metals nec
Metal products
Motor vehicles and
parts
Transport equipment
nec
Electronic
equipment
Machinery and
equipment nec
Manufactures nec
Electricity
Gas manufacture,
distribution
Water
Construction
Trade
Transport nec




51
52
CMN
OFI




24
25
SGR
OFD
Sugar
Food products nec




53
54
ISR
OBS




26
B_T


55
ROS


27
TEX
Beverages and
tobacco products
Textiles


56
OSG


28
29
WAP
LEA
Wearing apparel
Leather products




57
DWE
Communication
Financial services
nec
Insurance
Business services
nec
Recreational and
other services
Public
Administration,
Defense, Education,
Health
Dwellings


Note: The column labelled V4 indicates the availability of the sectors in Version 4 of the GTAP database: means it is
distinguished in the database,  means it is not available. Similarly the column labelled V5-V7 indicates the availability of the
sectors in Version 5 through 7 of the GTAP database.
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An Introduction to the GTAP database and model
Version 3: 6 February 2008
2.1.2 Regions in different versions of the GTAP database
In contrast with the number of sectors which has been constant since Version 5 the number of
regions increases with every release of a dataset2. Table 2.2 lists the 45 regions in Version 4
used in this training.
Table 2.2: List of regions in GTAP Version 4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Code
aus
nzl
jpn
kor
idn
mys
phl
sgp
tha
vnm
chn
hkg
twn
ind
lka
ras
can
usa
mex
cam
ven
col
rap
Description
Australia
New Zealand
Japan
Korea
Indonesia
Malaysia
Philippines
Singapore
Thailand
Viet Nam
China
Hong Kong
Taiwan
India
Sri Lanka
Rest of South Asia
Canada
United States of America
Mexico
Central America and the Caribbean
Venezuela
Colombia
Rest of the Andean Pact
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Code
arg
bra
chl
ury
rsm
gbr
deu
dnk
swe
fin
reu
eft
cea
fsu
tur
rme
mar
rnf
saf
rsa
rss
row
Description
Argentina
Brazil
Chile
Uruguay
Rest of South America
United Kingdom
Germany
Denmark
Sweden
Finland
Rest of European Union
EFTA
Central European Associates
Former Soviet Union
Turkey
Rest of Middle East
Morocco
Rest of North Africa
South African Customs Union
Rest of southern Africa
Rest of sub-Saharan Africa
Rest of World
The regions are ordered on the basis of geography. At the bottom we find the African regions.
Apart from Morocco, African countries are only available as part of much larger aggregates,
reflecting the notorious scarcity of data from developing countries in general and Africa in
particular. To address this issue a project financed by the World Bank is currently underway
to construct a GTAP African database. The first pre-release includes 31 African countries and
9 regions that aggregate the rest of the world (see table 2.3).
The work on the Africa database is undertaken in parallel to the development of the next
release of the standard GTAP database, version 7. The reason for this parallel development of
the two datasets is that all regional data are linked to each other in the GTAP database.
Including African countries based on lower quality data would affect all regions in the
database and thus also applications for which distinguishing different African countries is not
relevant.
2
Of every dataset several pre-releases are distributed to consortium members (institutes that pay a fee
to support the GTAP center) so they can be checked in real applications.
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Version 3: 6 February 2008
Table 2.3: List of regions in the GTAP Africa database (stage 1)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Code
Oceania
EastAsia
SEAsia
SouthAsia
NorthAmerica
LatinAmerica
EU25
RestEurope
MiddleEast
dza
egy
lby
mar
tun
civ
sen
xwa
gha
nga
xew
Description
Oceania
East Asia
Southeast Asia
South Asia
North America
Latin America
European Union 25
Rest of Europe
Middle East
Algeria
Egypt
Libyan Arab Jamahiriya
Morocco
Tunisia
Cote d'Ivoire
Senegal
Rest of WAEMU
Ghana
Nigeria
Rest of ECOWAS
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Code
cmr
xcc
ago
eth
ken
sdn
xcs
bwa
zaf
xsc
cod
mdg
mwi
mus
moz
tza
uga
zmb
zwe
xss
Description
Cameroon
Rest of CAEMC
Angola
Ethiopia
Kenya
Sudan
Rest of COMESA
Botswana
South Africa
Rest of South African CU
Congo Democratic Republic of
Madagascar
Malawi
Mauritius
Mozambique
Tanzania
Uganda
Zambia
Zimbabwe
Rest of Sub-Saharan Africa
The most recent (October 2007) pre-release of Version 7 includes 105 regions (see table 2.4).
It already contains much more detail on African countries than Version 4 since several
countries have already been included in the standard database before the start of the work on
the GTAP Africa database.
To assess the implications for the LUPIS project table 2.5 lists for each of the countries in the
LUPIS project the GTAP region to which it belongs. All non-African countries are available
as individual countries in the standard GTAP database since Version 4. Of the African
countries only Senegal and Tunisia are available as individual countries in Version 7. The
other countries are part of an aggregated region with a varying number of other countries.
Only for Kenya the Africa database offers a country-level perspective. In that database Mali
and Niger are part of the “rest of ECOWAS” region, which also includes Benin, Burkina
Faso, Cape Verde, The Gambia, Guinea, Guinea Bissau, Liberia, Sierra Leone, and Togo. A
rather mixed bag of countries which makes it difficult to infer results for Mali or Niger from
this aggregated region.
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Version 3: 6 February 2008
Table 2.4: List of regions in the GTAP Version 7 database (pre-release 3)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
Code
AUS
NZL
XOC
CHN
HKG
JPN
KOR
TWN
XEA
KHM
IDN
MYS
PHL
SGP
THA
VNM
XSE
BGD
IND
PAK
LKA
XSA
CAN
USA
MEX
XNA
ARG
BOL
BRA
CHL
COL
ECU
PRY
PER
URY
VEN
XSM
NIC
XCA
XCB
AUT
BEL
CYP
CZE
DNK
EST
FIN
FRA
DEU
GRC
HUN
IRL
ITA
Description
Australia
New Zealand
Rest of Oceania
China
Hong Kong
Japan
Korea
Taiwan
Rest of East Asia
Cambodia
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
Rest of Southeast Asia
Bangladesh
India
Pakistan
Sri Lanka
Rest of South Asia
Canada
Unted States of America
Mexico
Rest of North America
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Paraguay
Peru
Uruguay
Venezuela
Rest of South America
Nicaragua
Rest of Central America
Caribbean
Austria
Belgium
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
Code
LVA
LTU
LUX
MLT
NLD
POL
PRT
SVK
SVN
ESP
SWE
GBR
CHE
XEF
ALB
BGR
HRV
ROM
RUS
UKR
XEE
XER
KAZ
KGZ
XSU
ARM
AZE
GEO
IRN
TUR
XWS
EGY
MAR
TUN
XNF
NGA
SEN
XWF
XCF
XAC
MDG
MWI
MUS
MOZ
TZA
UGA
ZMB
ZWE
XEC
BWA
ZAF
XSC
Description
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Switzerland
Rest of EFTA
Albania
Bulgaria
Croatia
Romania
Russian Federation
Ukraine
Rest of Eastern Europe
Rest of Europe
Kazakstan
Kyrgyzstan
Rest of Former Soviet Union
Armenia
Azerbaijan
Georgia
Iran, Islamic Republic of
Turkey
Rest of Western Asia
Egypt
Morocco
Tunisia
Rest of North Africa
Nigeria
Senegal
Rest of Western Africa
Central Africa
South-Central Africa
Madagascar
Malawi
Mauritius
Mozambique
Tanzania
Uganda
Zambia
Zimbabwe
Rest of Eastern Africa
Botswana
South Africa
Rest of South Africa Customs Union
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Table 2.5: Regions to which countries belong in different versions of the GTAP database
Brazil
China
India
Indonesia
Kenya
Mali
Niger
Senegal
Tunisia
Version 4
Brazil
China
India
Indonesia
Rest of Sub-Saharan Africa
Rest of Sub-Saharan Africa
Rest of Sub-Saharan Africa
Rest of Sub-Saharan Africa
Tunisia
Africa Database
Latin America
East Asia
South Asia
South-East Asia
Kenya
Rest of ECOWAS
Rest of ECOWAS
Senegal
Tunisia
Version 7 (pre-release 3)
Brazil
China
India
Indonesia
Rest of Eastern Africa
Rest of Western Africa
Rest of Western Africa
Senegal
Tunisia
2.2 Some comments on the GTAP database
When working with the GTAP database it is important to remember that it represents “the
world according to GTAP”. Just as any other database a range of assumptions and
intermediate steps are needed to construct such an internally consistent database from wide
variety of inconsistent raw data. The global use of the database for policy-oriented research
implies a rigorous checking of data by a wide range of experts few other databases are
subjected to. Every release of the data involves changes based on feedback actively solicited
from users as part of a philosophy “if you do not like it, help fix it”.
In the context of analyses for developing countries several limitations of the database should
be kept in mind. The GTAP database is derived from national accounts at country level. This
implies that the informal sector is not included in the database, missing a sector of crucial
importance for especially the poor in developing countries. Being based on national accounts
only a distinction between private and government consumption can be made. Thus no
distinction between different types of households in terms of income sources or expenditures
can be made. There implies a very limited scope for assessing income distribution effects,
apart from changes in the relative wages of land, skilled labour, unskilled labour, capital and
natural resources.
Much more detailed documentation of the database and the way it is constructed from various
data sources, more detailed definitions of the sectors etc. is available on the GTAP website
(https://www.gtap.agecon.purdue.edu/databases/v6/v6_doco.asp).
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3 A short introduction to the GTAP model
The first thing to note about the GTAP model is that “the GTAP model” does not exist. Since
the model needs to be tailored to the research question that is being addressed the GTAP
network serves as a way to exchange models without identifying a single model as the GTAP
model. It practice there a range computable general equilibrium (CGE) models that use the
GTAP database and start from the same theoretical framework but are adapted to addressing
different economic contexts and/or research questions.
This being said there is a standard GTAP model distributed through the GTAP website
(freely available, only the GTAP database requires a license). In practice this standard model
serves as the starting point and benchmark for different users. For example, at LEI a model is
developed from the standard model to better capture land supply and bio-fuels (LEITAP). In
addition to the standard GTAP model there is also a dynamic GTAP (GTAP-dyn) model (the
standard model is static, i.e. only models a single time-period), a GTAP model developed for
analyzing energy issues (GTAP-E), and a model of migration (GTAP-mig). These model
versions (with technical documentation) are available through the GTAP website. In the
training the standard GTAP model is used.
3.1 What can a GTAP model do?
Not surprising given its name, the majority of models using the GTAP database focus on
assessing trade policies. In the current World Trade Organization (WTO) negotiations on
reducing barriers to international trade, about all quantitative analyses of possible agreements
use a CGE model based on GTAP data. These assessments can provide indications of
changes in, for example, production by sector at national level, trade flows between countries,
consumption at national level, tariffs and tax incomes, wages and prices, and welfare impacts
of a change in trade policy.
GTAP is a macro-economic model, and tailored for modelling international trade flows. It
tracks international trade flows between countries and is therefore suitable for analyzing the
impact of multilateral or bilateral trade agreements. It is also possible to assess the impact of
domestic policies on the international competitiveness of sectors, agricultural as well as nonagricultural. So for example, it is possible to assess what a tax on labour will imply for a
country’s position in global markets.
Apart from addressing issues of international trade, GTAP includes a complete description of
the economy in each region (see next section). This implies that it is also possible to perform
macro-economic assessments of a single country (while not forgetting international markets).
For example, it is possible to assess what the implications of a subsidy for rice production are
on the rice sector itself, but also on other agricultural, manufacturing and service sectors from
which resources are drawn away towards rice production, and on the consumers that need to
pay for the subsidy through an increase in taxes.
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Figure 2.1: simplified illustration of a regional model within the GTAP model
Primary agriculture
National market
for land, labour
and capital
Processed food
Fiber crops
Government
Natural resource
extraction
Private
household
National market
for
consumption
goods
Labour intensive
manufacturing
Capital intensive
manufacturing
Legend:
Supply
Services
Demand
Rest of the world
Note: the sectors mentioned are an illustration of the sectors that can be included in a GTAP model. In
principle any aggregation of the 57 sectors in the GTAP database (see table 2.1) can be used in the
model.
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Figure 2.2: Simplified illustration of links between regional models in the GTAP model
Region X
Legend:
Priv
ate
hou
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old
Global
bank
Region Y
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3.2
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the GTAP model look like?
Flow of capital
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For every region in the model there is a single representative household demanding
consumption goods (including savings) on the behalf of all private households and a
government (Figure 2.1). Total demand is determined by income earned by land, labour and
capital as well as income from taxes. The demand for goods can be met by national producers
or by imports. For each sector there is a single producer, i.e. there is a one producer of rice,
one of wheat, one for labour intensive manufactured goods, one of services etc.
The model traces trade between all regions in the model and accounts for trade barriers
between regions through inclusion of tariffs (Figure 2.2). These tariffs may drive a wedge
between prices in regions, i.e. the same product may be more expensive in one region than in
another because of tariffs. Whereas international trade is modelled by tracing all bilateral
flows international capital flows are governed by a global bank. This bank collects savings
and uses these for international investments. Since savings are pooled by the global bank
before being sued for investments there is no tracing of bilateral capital flows.
Prices of goods and of land, labour and capital in each region adjust to assure that both
national and international demand and supply are equal, hence the term general equilibrium
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models. Thus when a policy simulation is run, for example lowering tariffs between regions,
the model computes by sector for each region production, consumption and trade (both
imports and exports) as well as price levels that result in equilibrium at national and
international markets.
3.3 Some technicalities of the model
The GTAP model is a model in the so-called dual form. This means that it does not look like
an optimization model at first glance, there is no statement in the model code that says
“maximize income” or “maximize profit”. This is a crucial difference with (non)linear
optimization models, like the FFSIM farm household model, that are written in primal form
and do contain a statement that indicates that a specific variable needs to be maximized.
GTAP is (as most CGE models) written as a system of linear equations that is solved
simultaneously. These equations describe the behaviour of the agents in the model (the
producers, consumer and government). The behavioural equations are derived from the firstorder conditions of the maximization problems of the agents. For example, in the case of
producers the behavioural equations describe that given set of prices (of inputs and outputs) a
specific amount of input will be demanded. This equation is derived from solving the
producer’s profit maximization problem and therefore implicitly maximizes the producer’s
profit without directly specifying the production function or the profit maximization itself.
Thus, although there is nowhere a statement in the model that refers to maximization of
utility, all behavioural equations are in line with utility maximization of each agent. When the
model is being solved a set of prices is searched such that all equations in the model are
satisfied simultaneously.
Using the dual form allows to include a set of (implicit) objective functions (one for each
agent) whereas in a direct optimization model only one objective function can be specified.
The dual form thus allows each agent to maximize its own utility within the constraints of
overall market clearing (i.e. that total demand needs to meet total supply). This is reflected in
the model code where separate blocks of equations describe the behaviour of firms, the
consumer, government, and market clearing conditions.
A specific feature of the GTAP model is that it solved in terms of percentage change. This
has many advantages in terms of the algorithms needed to find a solution to the system of
equations, as well as a close link between results and economic theory (for example, showing
immediately income and substitution effects in the demand equations). A disadvantage of a
model in percentage terms is that it is not very intuitive for novice users, and it complicates
model extensions requiring adjustments to the production function and resource constraints.
3.4 Some observations on the GTAP model
As a general equilibrium model GTAP is well-suited for assessing economy-wide effects of
economic policies. Being well-rooted in economic theory it provides welfare assessments that
summarize the overall impact of a policy on an economy.
Being a macro economic model (standard) GTAP is not well suited to address poverty or
sustainability issues. Although land is an explicit input in agricultural production in GTAP it
is not measured in hectares but in values. Establishing a link between changes derived from
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GTAP and changes in areas of land cover requires additional information beyond the standard
GTAP database. Using the dual form also implies that production functions are not explicit
which complicates the assessment of different technologies (which tend to have a rather
prominent role in farm households models).
Possibilities for assessing poverty or distributional issues are rather limited with the presence
of a single private consumer for each region in GTAP. This is due to the GTAP database and
can be adjusted if more detailed data are available. With the standard database it is not
possible to assess shifts in income between poor and rich households. The only crude
measure of distributional impacts is provided by changes in wages of land, labour and capital.
When using the GTAP model in a developing country setting it is important to reflect on the
so-called “closure” of the model. The closure rules describe the way in which the markets
function. For example, in the standard model full employment is assumed, i.e. wages will
adjust such that all labour is used in production. In the case of widespread unemployment it
may be more realistic to switch to employment adjusting while (real) wages are fixed. In this
case an expansion of production would increase employment but does not change wages,
whereas in the standard model employment is always the same and wages rise if more labour
is demanded. A mixture of these two options is also possible, with wages rising once full
employment is reached. The way in which the government maintains its budget also requires
close attention in the case of a developing country setting. In case it is unlikely that the
government is able to reduce its expenditures or raise taxes, additional income has to come
from abroad. Different assumptions on the closure rules can lead to radically different model
outcomes with an otherwise identical model.
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4 Installation instructions
In order to explore the GTAP database and the model an elaborate hands-on training
document of Ken Pearson and Mark Horridge (2005) “Hans-on computing with RunGTAP
and WinGEM to introduce GTAP and GEMPACK” can be used. This document is available
at www.gtap.org and included in the files accompanying this document. To provide an idea
of the type and detail of data included in the GTAP database also the full version
4.1 Installation instructions
In order to do the hands-on exercises several components need to be installed:
-
RunGTAP – interface for running the GTAP model
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GTAP model – the GTAP model
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GTAP database – the GTAP database
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ViewHar – program to view input and output files of the GTAP model (GTAP is
programmed in GEMPACK, a software built to solve CGE models, and uses files
with the .har extension to save data)
All of these components can be installed by running the “setup.exe” program in the
RunGTAP directory (contained in the set of files used in the training, but also available for
download at the GTAP website).
4.2 The GTAP Version 4 database
Every GTAP database has a similar structure, although there have been some changes to this
structure between Version 4 and the more recent versions. A key feature of the GTAP system
is a complete separation of data and model. This implies that you can run the same model
(GTAP model code) with different aggregations of the GTAP database (i.e different levels of
detail in sectors and regions). With this document the full GTAP version 4 database is
provided. This database reflects the world economy in 1995, measured in millions US $. The
database can be viewed using the program ViewHar (which will be located in the RunGTAP
directory). The data are contained in the file “GSDDAT.har” which is in the directory
“GTAP 4 data”. After opening the file with VIEWHAR you can explore the different
variables that together provide enough information to run the GTAP model.
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References
Lee, H.-L., T. Hertel, B. Sohngen and N. Ramankutty (2005). Towards An Integrated Land
Use Database for Assessing the Potential for Greenhouse Gas Mitigation Technical Paper 25.
Publisher, Purdue
Appendices
Useful points to start on the GTAP website (you need to register to be able to download files,
this is free).
Description of the content of the database and data sources by country
https://www.gtap.agecon.purdue.edu/databases/v6/v6_doco.asp
List of popular books on CGE modelling:
https://www.gtap.agecon.purdue.edu/resources/cge_books.asp
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