Incorporating International Capital Ownership into the GTAP Model: Results for Asia-Pacific Trade Liberalisation
AbstractIn this paper, some major modifications are made to the existing GTAP structure and database to incorporate a long-run closure in which changes in the ownership of capital stocks are determined endogenously and income earned on endowment commodities accrues to the owners of those endowments. This long-run closure assumes that in the long run all economies are growing at a common steady-state rate of growth, determined by the rate of population and technological growth. In order to ensure valid comparative statics the underlying growth rate in the database must equal this steady-state rate of growth. Shocks are imposed to equate the growth rates of capital across regions and thus create a steady-state database. Once the GTAP model and database have been modified, they are then used to simulate the long-run effects of Asia-Pacific trade liberalisation on welfare and gross national product. It is found that the foreign ownership of assets does have a significant effect on the projected outcome of trade liberalisation in the Asia-Pacific region.
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Bibliographic InfoPaper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number ip-72.
Date of creation: Apr 1999
Date of revision:
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D33 - Microeconomics - - Distribution - - - Factor Income Distribution
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
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