The CGE Model Database

Abstract

In this chapter, we describe the two components of the database of a computable general equilibrium (CGE) model. The first is the Social Accounting Matrix (SAM). The SAM database reports the value of all transactions in an economy during a period of time. The data are organized in a logical framework that provides a visual display of the transactions as a circular flow of national income and spending. The SAM's microeconomic data describe transactions made by each agent in a region's economy. When aggregated, the SAM's micro data describe the region's macro economy. The SAM's micro data can be used to calculate descriptive statistics on an economy's structure. A CGE model database also includes elasticity parameters that describe the responsiveness of producers and consumers to changes in income and relative prices. The role of these parameters in driving model results can be evaluated in a sensitivity analysis. The database of a computable general equilibrium model has two components. One is the Social Accounting Matrix (SAM). The SAM database reports the value of all transactions in an economy over a specified period of time, usually a year. The SAM data are organized in a logical framework of rows and columns that provides a visual display of the transactions as a circular flow of national income and spending in an economy. The SAM that we use throughout this book, for demonstration, describes the economy of the United States in 2007. The second component of a CGE model database provides the elasticity parameters that describe producer and consumer responsiveness to changes in relative prices and income. Until relatively recently, development of a database for a CGE model represented a time-intensive first step in a CGE-based analysis. Today, most CGE-based research draws at least in part on a global database of country SAMs and elasticity parameters that was developed and is regularly updated by the GTAP Center at Purdue University. The GTAP Center relies on individual researchers to contribute country data. The data are drawn from multiple sources, including national income and product accounts, international trade databases such as the United Nation's Comtrade, and other data sources that describe taxes, tariffs, and other government interventions. The GTAP Center then integrates and balances the country data contributions into a unified and internally consistent global database.