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Equilibrium Price Solution Of Net Trade Models Using Elasticities

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  • Seeley, Ralph

Abstract

This report shows a solution procedure which can rapidly calculate equilibrium world prices in a large, complex net trade model. The "elasticity solution procedure" works for a model in which price elasticities are fairly stable over time and various prices. The model must accept a world price vector and return a residual world net trade vector. The procedure automatically stays in the region of positive prices and quantities. It builds a complete information set of own- and cross-price elasticities to fit the model's behavior. The procedure runs on the IIASA and GOL world agriculture models with sharp improvements in convergence time over Walrasian tAtonnement and gradient search, and moderate improvements over Newton's method. The procedure can reconcile inconsistent trade estimates made by country analysts.

Suggested Citation

  • Seeley, Ralph, 1986. "Equilibrium Price Solution Of Net Trade Models Using Elasticities," Staff Reports 277892, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerssr:277892
    DOI: 10.22004/ag.econ.277892
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    File URL: https://ageconsearch.umn.edu/record/277892/files/ers-report-247.pdf
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    References listed on IDEAS

    as
    1. Seeley, Ralph, 1985. "Price Elasticities From The Iiasa World Agriculture Model," Staff Reports 277684, United States Department of Agriculture, Economic Research Service.
    2. Brandsma, Andries S. & Hughes Hallett, A. J. & van der Windt, Nico, 1983. "Optimal control of large nonlinear models: An efficient method of policy search applied to the Dutch economy," Journal of Policy Modeling, Elsevier, vol. 5(2), pages 253-270, June.
    3. Robert S. Holbrook, 1974. "A Practical Method for Controlling a Large Nonlinear Stochastic System," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 1, pages 155-175, National Bureau of Economic Research, Inc.
    4. repec:bla:econom:v:40:y:1973:i:160:p:402-09 is not listed on IDEAS
    5. Liu, Karen, 1985. "USDA's World Grain, Oilseeds, and Livestock (GOL) Model," 1985: Agricultural Trade Modeling - The State of Practice and Research Issues Meeting, December 1985, Vancouver, British Columbia, Canada 50634, International Agricultural Trade Research Consortium.
    6. Saari, Donald G, 1985. "Iterative Price Mechanisms," Econometrica, Econometric Society, vol. 53(5), pages 1117-1131, September.
    7. Roningen, Vernon O. & Wainio, John & Liu, Karen, 1985. "The World Grain, Oilseeds, And Livestock Model--A Microcomputer Version," Staff Reports 277806, United States Department of Agriculture, Economic Research Service.
    8. Liu, Karen & Roningen, Vernon O., 1985. "The World Grain-Oilseeds-Livestock (Gol) Model, A Simplified Version," Staff Reports 277671, United States Department of Agriculture, Economic Research Service.
    9. A. P. Lerner, 1933. "The Diagrammatical Representation of Elasticity of Demand," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(1), pages 39-44.
    10. Liu, Karen, 1985. "A Grain, Oilseeds, and Livestock Model of Japan," Staff Reports 277786, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Seeley, Ralph, 1998. "Using the Linker: Output, Input, and Operation," Staff Reports 278828, United States Department of Agriculture, Economic Research Service.

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