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Factor Markets in Applied Equilibrium Models: The current state and planned extensions towards an improved presentation of factor markets in agriculture

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  • Shutes, Lindsay
  • Rothe, Andrea
  • Banse, Martin

Abstract

This paper describes how factor markets are presented in applied equilibrium models and how we plan to improve and to extend the presentation of factor markets in two specific models: MAGNET and ESIM. We do not argue that partial equilibrium models should become more ‘general’ in the sense of integrating all factor markets, but that the shift of agricultural income policies to decoupled payments linked to land in the EU necessitates the inclusion of land markets in policy-relevant modelling tools. To this end, this paper outlines options to integrate land markets in partial equilibrium models. A special feature of general equilibrium models is the inclusion of fully integrated factor markets in the system of equations to describe the functionality of a single country or a group of countries. Thus, this paper focuses on the implementation and improved representation of agricultural factor markets (land, labour and capital) in computable general equilibrium(CGE) models. This paper outlines the presentation of factor markets with an overview of currently applied CGE models and describes selected options to improve and extend the current factor market modelling in the MAGNET model, which also uses the results and empirical findings of our partners in this FP project.

Suggested Citation

  • Shutes, Lindsay & Rothe, Andrea & Banse, Martin, 2012. "Factor Markets in Applied Equilibrium Models: The current state and planned extensions towards an improved presentation of factor markets in agriculture," Working papers 122851, Factor Markets, Centre for European Policy Studies.
  • Handle: RePEc:ags:famawp:122851
    DOI: 10.22004/ag.econ.122851
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    File URL: https://ageconsearch.umn.edu/record/122851/files/FM_WP23%20Shutes%20et%20al%20Factor%20Markets%20in%20Applied%20Equilibrium%20Models%20final.pdf
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    References listed on IDEAS

    as
    1. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521139779, December.
    2. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521766968, December.
    3. Martin Banse & Hans van Meijl & Andrzej Tabeau & Geert Woltjer, 2008. "Will EU biofuel policies affect global agricultural markets?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(2), pages 117-141, June.
    4. Burniaux, Jean-Marc & Truong Truong, 2002. "GTAP-E: An Energy-Environmental Version of the GTAP Model," GTAP Technical Papers 923, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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    Cited by:

    1. Banse, Martin & Rothe, Andrea & Tabeau, Andrzej & Meijl, Hans van & Woltjer, Geert, 2013. "Will improved access to capital dampen the need for more agricultural land? A CGE analysis of agricultural capital markets and world-wide biofuel policies," Working papers 155706, Factor Markets, Centre for European Policy Studies.
    2. Schutes, Lindsay, 2012. "Labour Supply Curves for EU Member and Candidate States: An applied general equilibrium analysis," Working papers 127729, Factor Markets, Centre for European Policy Studies.
    3. 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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