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Improving the Representation of the U.S. in the MyGTAP Model with the Disaggregation of Labor and Households

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  • Aguiar, Angel
  • Walmsley, Terrie
  • Carrico, Caitlyn

Abstract

The Global Trade Analysis Project (GTAP) modelling framework consists of a global database (Narayanan, Aguiar and McDougall, 2012) used in conjunction with a global applied general equilibrium model (Hertel, 1997). The GTAP model and database have been widely used for the analysis of global policy issues, such as free trade agreements. A limitation of the model is that it assumes just one regional household that captures both the government and private households. Those wishing to examine the impact of a global policy on multiple households in a particular country, while still retaining the rest of the world, are somewhat limited. The aim of this paper is to include additional detail for the U.S economy into the GTAP framework, thereby allowing for more detailed analysis of U.S. households. The starting point for this paper is the newly developed MyGTAP data program and model (Minor and Walmsley, 2013), which was specifically designed for this purpose. Additional data are gathered for the U.S. to incorporate 22 labor categories and 13 households, and modifications are also made to the MyGTAP model to better accommodate alternative demand structures within value added. We illustrate the use of this model by applying it to investigate the economic effects of the TransPacific Partnership (TPP) on U.S. households. The TPP agreement is quite extensive, covering a large portion of world trade and the removal of both tariff and non-tariff barriers. We find that the agreement has considerable potential to increase U.S. real GDP and incomes. Moreover, while all households in the U.S. gain as a result of rising employment/wages and falling prices, it is the low income households that gain most.

Suggested Citation

  • Aguiar, Angel & Walmsley, Terrie & Carrico, Caitlyn, 2013. "Improving the Representation of the U.S. in the MyGTAP Model with the Disaggregation of Labor and Households," Conference papers 332429, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332429
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    References listed on IDEAS

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