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EU Modeling Workshop Synthesis

EU Modeling Workshop Synthesis. David Abler Penn State University. State of EU Modeling – Good. Good complement of models Good communication among modelers The relevant policy issues are being addressed. Modeling Approaches.

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EU Modeling Workshop Synthesis

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  1. EU Modeling Workshop Synthesis David Abler Penn State University

  2. State of EU Modeling – Good • Good complement of models • Good communication among modelers • The relevant policy issues are being addressed

  3. Modeling Approaches • Different approaches (general equilibrium, partial equilibrium, math programming) each have value • Results from one model can be fed into another, more disaggregated model • But if this is done, results should be checked for consistency

  4. Coupled or Decoupled? • Same policies are treated differently in different studies (e.g., area payments) • One’s assumptions will determine one’s conclusions • Our assumptions are not empirically grounded • Reality lies between fully coupled and fully decoupled – more research needed to find out where it lies

  5. Trying to Put Square Pegs Into Round Holes? • Hard to reconcile policy realities with how some policies are incorporated into our models (e.g., GTAP) • Policies are too complicated to capture all their details • Are policies represented accurately enough to capture their effects?

  6. Scope of Policies Covered • Do our models include all the major policies that will be subject to WTO negotiations? • Policies that may need to be included: Export credit guarantees AMTA payments Green box payments

  7. The Parameter Problem • Knowledge base for traditional issues is old and narrow; for new consumer issues there is virtually no knowledge base • Delphi-like methods are vulnerable to a narrow knowledge base • New econometric work needed, but won’t be a panacea • Sensitivity analyses are useful • Ultimate test: do model projections agree with reality?

  8. Quality Differences • Product quality differences are significant (e.g., wheat, rice, beef, pork, etc.) • Becoming more significant as market responds to new consumer issues • Our models almost always assume homogenous products • How much does this hurt our results?

  9. Enlargement – Modeling Issues • Coupling/decoupling – affects supply response and budgetary costs • Significant product quality differences • Labor market assumptions – how will labor markets adjust, and how rapidly will they adjust? • Compliance costs for EU regulations • Transition period – length and conditions

  10. Consumer Demand • Choose an appropriate modeling approach for the problem • Our ability to conduct empirical research is limited by data – survey research needed • Continued work necessary to improve conceptual and empirical techniques • Look at research on other sectors where products are differentiated

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