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Assessing Global Computable General Equilibrium Model Validity Using Agricultural Price Volatility

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  • Jeffrey J. Reimer

Abstract

Computable General Equilibrium (CGE) models are commonly used for global agricultural market analysis. Concerns are sometimes raised, however, about the quality of their output since key parameters may not be econometrically estimated and little emphasis is generally given to model assessment. This article addresses the latter issue by developing an approach to validating CGE models based on the ability to reproduce observed price volatility in agricultural markets. We show how patterns in the deviations between model predictions and validation criteria can be used to identify the weak points of a model and guide development of improved specifications with firmer empirical foundations. Copyright 2007, Oxford University Press.

Suggested Citation

  • Jeffrey J. Reimer, 2007. "Assessing Global Computable General Equilibrium Model Validity Using Agricultural Price Volatility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 383-397.
  • Handle: RePEc:oup:ajagec:v:89:y:2007:i:2:p:383-397
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.00977.x
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    References listed on IDEAS

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    Cited by:

    1. Kym Anderson & Ernesto Valenzuela & Lee Ann Jackson, 2008. "Recent and Prospective Adoption of Genetically Modified Cotton: A Global Computable General Equilibrium Analysis of Economic Impacts," Economic Development and Cultural Change, University of Chicago Press, pages 265-296.
    2. Hong, Chanyoung & Yang, Heewon & Hwang, Wonsik & Lee, Jeong-Dong, 2014. "Validation of an R&D-based computable general equilibrium model," Economic Modelling, Elsevier, pages 454-463.
    3. Eric Kemp-Benedict, 2012. "General Equilibrium as a Topological Field Theory," Papers 1209.1705, arXiv.org.
    4. Michiel van Dijk & George Philippidis & Geert Woltjer, 2016. "Catching up with history: A methodology to validate global CGE models," FOODSECURE Technical papers 9, LEI Wageningen UR.
    5. Jean-Michel Courtault & Riccardo Magnani, 2014. "How much can European governments squeeze out of their taxpayers?," Economics Bulletin, AccessEcon, pages 1945-1960.
    6. repec:eee:wdevel:v:96:y:2017:i:c:p:216-230 is not listed on IDEAS
    7. Hussein, Zekarias & Hertel, Thomas W. & Golub, Alla, 2013. "Climate change, mitigation policy, and poverty in developing countries," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150732, Agricultural and Applied Economics Association.
    8. Dixon, Peter B. & Rimmer, Maureen T., 2013. "Validation in Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, Elsevier.
    9. repec:gta:jnlgea:v:2:y:2017:i:2:p:128-154 is not listed on IDEAS
    10. repec:eee:ecmode:v:64:y:2017:i:c:p:399-408 is not listed on IDEAS
    11. Lichtenberg, Erik & Strand, Ivar E., Jr., 2000. "Joint Adoption Of Multiple Technologies: A Dual, Latent Demand Approach," Working Papers 28566, University of Maryland, Department of Agricultural and Resource Economics.
    12. repec:eee:rensus:v:77:y:2017:i:c:p:945-954 is not listed on IDEAS
    13. repec:ebl:ecbull:eb-17-00008 is not listed on IDEAS
    14. Beckman, Jayson & Hertel, Thomas & Tyner, Wallace, 2011. "Validating energy-oriented CGE models," Energy Economics, Elsevier, pages 799-806.
    15. Hovhannisyan, Vardges & Bozic, Marin, 2013. "On Price Endogeneity in the Analysis of Food Demand in China," Staff Papers 159771, University of Minnesota, Department of Applied Economics.
    16. repec:ags:usao13:148045 is not listed on IDEAS
    17. World Bank, 2009. "Strengthening Bolivian Competitiveness : Export Diversification and Inclusive Growth," World Bank Publications, The World Bank, number 2656.
    18. Countryman, Amanda M. & Narayanan, Badri G., 2017. "Price volatility, tariff structure and the special safeguard mechanism," Economic Modelling, Elsevier, pages 399-408.
    19. Artavia, Marco & Grethe, Harald & Zimmermann, Georg, 2015. "Stochastic market modeling with Gaussian Quadratures: Do rotations of Stroud's octahedron matter?," Economic Modelling, Elsevier, pages 155-168.
    20. Bekkers, Eddy & Brockmeier, Martina & Francois, Joseph & Yang, Fan, 2017. "Local Food Prices and International Price Transmission," World Development, Elsevier, pages 216-230.
    21. Barkhordar, Zahra A. & Saboohi, Yadollah, 2013. "Assessing alternative options for allocating oil revenue in Iran," Energy Policy, Elsevier, pages 1207-1216.

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