IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/332900.html
   My bibliography  Save this paper

Using a regional CGE model for rapid assessments of the economic implications of terrorism: creating GRAD-ECAT (Generalized, Regional And Dynamic Economic Consequence Analysis Tool

Author

Listed:
  • Dixon, Peter
  • Jerie, Michael
  • Rimmer, Maureen
  • Wittwer, Glyn

Abstract

The Terrorism Risk Assessment (TRA) groups in the Department of Homeland Security assess millions of terrorism scenarios defined by location, agent (e.g. nuclear device), and delivery method (e.g. car bomb). For each scenario they estimate deaths, injuries, property damage, clean-up and health expenses, visitor discouragement, and other damage dimensions. The TRA groups translate damages into economic measures, e.g. loss of GDP. Previously they used an input-output (I-O) model. Here we replace I-O with computable general equilibrium (CGE). Solving CGE models is computationally time-consuming and requires specialist skills. For the TRA groups this creates two challenges: feasibility and security. A model that cannot be solved in less than a fraction of a second is infeasible for analyzing millions of scenarios. The TRAs can rely only on people with high security clearances, limiting the possibilities for obtaining specialist advice. Our approach to these challenges was to use a CGE model to estimate elasticities that connect economic implication variables with damage or driving variables. We supplied these elasticities for use in the equation: v=Sum(s, E(s,d,v)*s ) where v and s are the percentage changes in an implication variable and a driving variable. E(s,d,v) is a CGE-estimated elasticity that we supplied. It is the elasticity of v to a terrorism shock s perpetrated in target region d, e.g. the percentage effect on national welfare of destruction of 1 per cent of the capital stock in congressional district NY14. Our elasticity approach solves both challenges. First, for any given terrorism scenario specified by a location and a vector of s variables, the elasticity equation can be computed in nanoseconds to evaluate a range of implication variables, v. Second, as outside contractors, we had no need for access to sensitive information on specific shock vectors s and target regions d.

Suggested Citation

  • Dixon, Peter & Jerie, Michael & Rimmer, Maureen & Wittwer, Glyn, 2017. "Using a regional CGE model for rapid assessments of the economic implications of terrorism: creating GRAD-ECAT (Generalized, Regional And Dynamic Economic Consequence Analysis Tool," Conference papers 332900, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332900
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/332900/files/8414.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dixon Peter B & Lee Bumsoo & Muehlenbeck Todd & Rimmer Maureen T. & Rose Adam & Verikios George, 2010. "Effects on the U.S. of an H1N1 Epidemic: Analysis with a Quarterly CGE Model," Journal of Homeland Security and Emergency Management, De Gruyter, vol. 7(1), pages 1-19, December.
    2. K. Fox, Alan & Powers, William, 2008. "Textile and Apparel Barriers and Rules of Origin: What’s Left to Gain after the Agreement on Textiles and Clothing?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 656-684.
    3. Peter B. Dixon & Maureen T. Rimmer, 2004. "The US Economy from 1992 to 1998: Results from a Detailed CGE Model," The Economic Record, The Economic Society of Australia, vol. 80(s1), pages 13-23, September.
    4. Peter B. Dixon & Maureen T. Rimmer & Bryan W. Roberts, 2014. "Restricting Employment Of Low-Paid Immigrants: A General Equilibrium Assessment Of The Social Welfare Implications For Legal U.S. Wage-Earners," Contemporary Economic Policy, Western Economic Association International, vol. 32(3), pages 639-652, July.
    5. Steven Zahniser & Tom Hertz & Peter Dixon & Maureen Rimmer, 2012. "Immigration Policy and its Possible Effects on U.S. Agriculture and the Market for Hired Farm Labor: A Simulation Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 477-482.
    6. James Andrew Giesecke, 2011. "Development of a Large-scale Single US Region CGE Model using IMPLAN Data: A Los Angeles County Example with a Productivity Shock Application," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(3), pages 331-350, April.
    7. P. B. Dixon & J. A. Giesecke & M. T. Rimmer & A. Rose, 2011. "The Economic Costs To The U.S. Of Closing Its Borders: A Computable General Equilibrium Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(1), pages 85-97.
    8. Dixon, Peter B. & Rimmer, Maureen T., 2013. "Validation in Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1271-1330, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter B. Dixon & Michael Jerie & Maureen T. Rimmer & Glyn Wittwer, 2017. "Using a regional CGE model for rapid assessments of the economic implications of terrorism events: creating GRAD-ECAT (Generalized, Regional And Dynamic Economic Consequence Analysis Tool)," Centre of Policy Studies/IMPACT Centre Working Papers g-280, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. Zahniser, Steven & Hertz, Thomas & Dixon, Peter B. & Rimmer, Maureen T., 2017. "The Potential Effects of Increased Demand for U.S. Agricultural Exports on Metro and Nonmetro Employment," Economic Research Report 262186, United States Department of Agriculture, Economic Research Service.
    3. Peter B. Dixon & Maureen T. Rimmer & Robert G. Waschik, 2017. "Macro, industry and regional effects of eliminating Buy America(n) programs: USAGE simulations," Centre of Policy Studies/IMPACT Centre Working Papers g-271, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Dixon, Peter B. & Koopman, Robert B. & Rimmer, Maureen T., 2013. "The MONASH Style of Computable General Equilibrium Modeling: A Framework for Practical Policy Analysis," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 23-103, Elsevier.
    5. Dixon, Peter & Rimmer, Maureen, 2021. "A GTAP Historical Simulation from 2004 to 2014," Conference papers 333258, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. J. Nassios & J.A. Giesecke, 2015. "The Macroeconomic and Sectoral Effects of Terrorism in the U.S.: A Reconciliation of CGE and Econometric Approaches," Centre of Policy Studies/IMPACT Centre Working Papers g-256, Victoria University, Centre of Policy Studies/IMPACT Centre.
    7. James A. Giesecke & John R. Madden, 2013. "Evidence-based regional economic policy analysis: the role of CGE modelling," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(2), pages 285-301.
    8. Jason Nassios & James A. Giesecke, 2018. "Informing Ex Ante Event Studies with Macro‐Econometric Evidence on the Structural and Policy Impacts of Terrorism," Risk Analysis, John Wiley & Sons, vol. 38(4), pages 804-825, April.
    9. Dixon, Peter B. & Rimmer, Maureen T. & Waschik, Robert G., 2018. "Evaluating the effects of local content measures in a CGE model: Eliminating the US Buy America(n) programs," Economic Modelling, Elsevier, vol. 68(C), pages 155-166.
    10. P.B. Dixon & M.T. Rimmer, 2018. "Creating a labor-market module for USAGE-TERM: illustrative application, theory and data," Centre of Policy Studies/IMPACT Centre Working Papers g-283, Victoria University, Centre of Policy Studies/IMPACT Centre.
    11. Dixon, Peter B. & Rimmer, Maureen T., 2016. "Johansen's legacy to CGE modelling: Originator and guiding light for 50 years," Journal of Policy Modeling, Elsevier, vol. 38(3), pages 421-435.
    12. Eddy Bekkers & Robert B. Koopman, 2022. "Simulating the trade effects of the COVID‐19 pandemic: Scenario analysis based on quantitative trade modelling," The World Economy, Wiley Blackwell, vol. 45(2), pages 445-467, February.
    13. Giesecke, James A. & Madden, John R., 2013. "Regional Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 379-475, Elsevier.
    14. Eduardo Haddad & Juan Manuel Samaniego & Alexandre Porsse & Santiago Ochoa & Luiz Gustavo Souza, 2011. "Interregional Interdependence among Ecuadorian Provinces: An Input-Output Analysis," ERSA conference papers ersa11p836, European Regional Science Association.
    15. Amaral Haddad, Eduardo & Cotarelli, Natália & Simonato, Thiago & Vale, Vinicius & Coelho Visentin, Jaqueline, 2018. "Estimation of NUTS2 Interregional Input-Output Systems for Greece, 2010 and 2013," TD NEREUS 3-2018, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS).
    16. Genti Kostandini & Elton Mykerezi & Cesar Escalante, 2014. "The Impact of Immigration Enforcement on the U.S. Farming Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(1), pages 172-192.
    17. Aaron B. Gertz & James B. Davies & Samantha L. Black, 2019. "A CGE Framework for Modeling the Economics of Flooding and Recovery in a Major Urban Area," Risk Analysis, John Wiley & Sons, vol. 39(6), pages 1314-1341, June.
    18. Francesco Felici & Maria Gesualdo, 2014. "ORANI-IT: a computable general equilibrium model of Italy," Working Papers 7, Department of the Treasury, Ministry of the Economy and of Finance.
    19. Narayanan, Badri G. & Hertel, Thomas W. & Horridge, J. Mark, 2010. "Disaggregated data and trade policy analysis: The value of linking partial and general equilibrium models," Economic Modelling, Elsevier, vol. 27(3), pages 755-766, May.
    20. Asano, Akihito & Tyers, Rod, 2015. "Third Arrow Reforms and Japan’s Economic Performance," Conference papers 332617, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    Keywords

    Research Methods/ Statistical Methods;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:332900. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.