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Improvement of GTAP Cropland Constant Elasticity of Transformation Nesting Structure

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  • Li, Liang
  • Taheripour, Farzad
  • Preckel, Paul V.
  • Tyner, Wallace E.

Abstract

This paper suggests a new approach to econometrically estimate parameters of multi-level Constant Elasticity of Transformation (CET) functional forms which are widely used in developing Computable General Equilibrium (CGE) models. An illustrative CET functional form is estimated using the proposed method based on historical data taken from the U.S. economy for the time period of 1996-210 to evaluate the performance of the new method. The proposed estimation process may be used to improve the existing cropland frontier used in GTAP-BIO model. Currently, the cropland frontier in GTAP-BIO model supplies land to different crops using a simple one-level CET function due to the lack of empirically estimated more flexible functional forms. The proposed method provides an opportunity to estimate more flexible multi-level CET functional forms according to available historical data. This will help to change the land supply side of the GTAP-BIO model based on historical observations.

Suggested Citation

  • Li, Liang & Taheripour, Farzad & Preckel, Paul V. & Tyner, Wallace E., 2012. "Improvement of GTAP Cropland Constant Elasticity of Transformation Nesting Structure," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124704, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea12:124704
    DOI: 10.22004/ag.econ.124704
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    References listed on IDEAS

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    2. Flaig, Dorothee & Grethe, Harald & McDonald, Scott, 2013. "Imperfect labour mobility in a CGE model: Does factor specific productivity matter?," Conference papers 332388, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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