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Preparing a multi-country, sub-national CGE model: EuroTERM including Ukraine

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  • Glyn Wittwer

Abstract

This paper describes the preparation of a database that identifies 74 industries in each of 328 regions in 40 countries, predominantly in Europe. The data are configured to support EuroTERM models of Europe at user chosen levels of industry and regional disaggregation. The TERM (The Enormous Regional Model) methodology has been applied to many countries over the past two decades to model sub-national regional impacts of policy scenarios. The methodology does not rely on sub-national regional input-output tables. Instead, estimates of regional activity shares are used to split a national CGE database into regions. Activity shares are based on industry by region employment numbers extracted from census data, regional agricultural and mining activity data and international trade data by port. EuroTERM provides an example of extending the TERM methodology. First, the GTAP master database is aggregated for non-European nations while keeping European nations plus Ukraine, Russia, Moldova (proxied by Rest of Eastern Europe), Belarus, Georgia, Albania, Iran, Turkey and North Africa represented separately. The database is reconfigured to 40 individual CGE databases. Using NUTS2 data and regional data for the oblasts of Ukraine, regional shares are estimated. Eurostats is the main source of these data. Regional shares provide the basis for splitting 24 European CGE databases to the NUTS-2 level and Ukraine to oblasts. The other nations in the database remain as single country regions. Industry cost structures or technologies are based on GTAP data for each nation. This approach differs from single-nation TERM, in which a single industry technology applies to each region. The methodology used to estimate inter-regional trades in TERM has been modified to accommodate matrices of known international trades from GTAP, while splitting origins and destinations into sub-national regions. Port activity data also contribute to estimation of subnational trade matrices. Electricity Global data on power plants by location have contributed to a split of electricity into 9 generating sectors plus distribution. The war in Ukraine has provided motivation for adding Ukraine, represented by 24 oblasts plus Kyiv city. The EuroTERM master database at present includes 74 sectors in 328 regions. A prototype 438 region GlobeTERM model, including virtually all regions in the GTAP master database, has also been developed as part of the project.

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  • Glyn Wittwer, 2022. "Preparing a multi-country, sub-national CGE model: EuroTERM including Ukraine," Centre of Policy Studies/IMPACT Centre Working Papers g-334, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-334
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    References listed on IDEAS

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    1. Glyn Wittwer, 2009. "The Economic Impacts of a New Dam in South‐East Queensland," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(1), pages 12-23, March.
    2. Glyn Wittwer & Mark Horridge, 2018. "Prefectural Representation of the Regions of China in a Bottom-up CGE Model: SinoTERM365," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 3(2), pages 178-213, December.
    3. Peter B. Dixon & Maureen T. Rimmer & Glyn Wittwer, 2011. "Saving the Southern Murray‐Darling Basin: The Economic Effects of a Buyback of Irrigation Water," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 153-168, March.
    4. Kym Anderson & James Giesecke & Ernesto Valenzuela, 2010. "How would global trade liberalization affect rural and regional incomes in Australia?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 389-406, October.
    5. Glyn Wittwer & Janine Dixon, 2012. "Upgrading irrigation infrastructure in the Murray Darling Basin: is it worth it?," Centre of Policy Studies/IMPACT Centre Working Papers g-228, Victoria University, Centre of Policy Studies/IMPACT Centre.
    6. Joaquim Bento de Souza Ferreira Filho & Mark Horridge, 2006. "The Doha Development Agenda and Brazil: Distributional Impacts ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 362-369.
    7. Bohlmann, H.R. & Horridge, J.M. & Inglesi-Lotz, R. & Roos, E.L. & Stander, L., 2019. "Regional employment and economic growth effects of South Africa’s transition to low-carbon energy supply mix," Energy Policy, Elsevier, vol. 128(C), pages 830-837.
    8. Arief A. Yusuf & Elizabeth L. Roos & Jonathan M. Horridge, 2018. "Indonesia's Moratorium on Palm Oil Expansion from Natural Forests: Economy-Wide Impacts and the Role of International Transfers," Asian Development Review, MIT Press, vol. 35(2), pages 85-112, September.
    9. Glyn Wittwer & Mark Horridge, 2010. "Bringing Regional Detail to a CGE Model using Census Data," Spatial Economic Analysis, Taylor & Francis Journals, vol. 5(2), pages 229-255.
    10. Simola, Antti & Perrels, Adriaan & Honkatukia, Juha, 2011. "Extreme weather events in Finland – a dynamic CGE-analysis of economic effects," Conference papers 332099, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    11. Ferreira Filho, Joaquim Bento de Souza & Horridge, Mark Jonathan, 2006. "Economic Integration, Poverty and Regional Inequality in Brazil," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 60(4), February.
    12. Joaquim Bento de Souza Ferreira Filho & Mark Horridge, 2021. "Biome Composition in Deforestation Deterrence and GHG Emissions in Brazil," World Scientific Book Chapters, in: Peter Dixon & Joseph Francois & Dominique van der Mensbrugghe (ed.), POLICY ANALYSIS AND MODELING OF THE GLOBAL ECONOMY A Festschrift Celebrating Thomas Hertel, chapter 13, pages 419-436, World Scientific Publishing Co. Pte. Ltd..
    13. Glyn Wittwer & Kym Anderson, 2021. "COVID‐19’s impact on Australian wine markets and regions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(4), pages 822-847, October.
    14. Djauhari Pambudi & Russell Smyth, 2008. "Making Indonesia More Attractive To Foreign Investors: A Computable General Equilibrium Analysis Of Reducing The Risk Premium In Central Java," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 20(3), pages 226-240, November.
    15. Glyn Wittwer & Janine Dixon, 2013. "Effective use of public funding in the Murray-Darling Basin: a comparison of buybacks and infrastructure upgrades," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(3), pages 399-421, July.
    16. Feng, Shenghao & Howes, Stephen & Liu, Yu & Zhang, Keyu & Yang, Jun, 2018. "Towards a national ETS in China: Cap-setting and model mechanisms," Energy Economics, Elsevier, vol. 73(C), pages 43-52.
    17. Mark Horridge & Glyn Wittwer, 2006. "The Impacts of Higher Energy Prices on Indonesia’s and West Java’s Economies using INDOTERM, a Multiregional Model of Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 200607, Department of Economics, Padjadjaran University, revised Aug 2006.
    18. Glyn Wittwer & Robert Waschik, 2021. "Estimating the economic impacts of the 2017–2019 drought and 2019–2020 bushfires on regional NSW and the rest of Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(4), pages 918-936, October.
    19. Glyn Wittwer & Onil Banerjee, 2015. "Investing in irrigation development in North West Queensland, Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(2), pages 189-207, April.
    20. Wittwer, Glyn & Vere, David T. & Jones, Randall E. & Griffith, Garry R., 2005. "Dynamic general equilibrium analysis of improved weed management in Australia's winter cropping systems," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(4), pages 1-15.
    21. Joaquim Bento Souza Ferreira Filho & Mark Horridge, 2017. "Land Use Change, Ethanol Production Expansion and Food Security in Brazil," Natural Resource Management and Policy, in: Madhu Khanna & David Zilberman (ed.), Handbook of Bioenergy Economics and Policy: Volume II, pages 303-320, Springer.
    22. Adams, Philip D. & Parmenter, Brian R., 2013. "Computable General Equilibrium Modeling of Environmental Issues in Australia," 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 553-657, Elsevier.
    23. Glyn Wittwer, 2017. "The relevance of inter-regional trade data produced by the 2012 Commodity Flow Survey for multi-regional CGE modelling," Centre of Policy Studies/IMPACT Centre Working Papers g-275, Victoria University, Centre of Policy Studies/IMPACT Centre.
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    Cited by:

    1. Liu, Xianglong Locky & Nassios, Jason & Giesecke, James, 2024. "To tax or to spend? Modelling tax policy responses to oil price shocks," Energy Policy, Elsevier, vol. 185(C).

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    More about this item

    Keywords

    regional economics; Europe; global analysis;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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