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Models to A nalys e Polic ies : the AG-MEMOD Model

Models to A nalys e Polic ies : the AG-MEMOD Model. Trevor Donnellan, Kevin Hanrahan, Kieran McQuinn and Brendan Riordan Rural Economy Research Centre (RERC) Teagasc , Dublin http://www.tnet.teagasc.ie/agmemod/public.htm. Overview. Questions on the impact of policy changes

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Models to A nalys e Polic ies : the AG-MEMOD Model

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  1. Models to Analyse Policies:the AG-MEMOD Model Trevor Donnellan, Kevin Hanrahan, Kieran McQuinn and Brendan Riordan Rural Economy Research Centre (RERC) Teagasc, Dublin http://www.tnet.teagasc.ie/agmemod/public.htm

  2. Overview • Questions on the impact of policy changes • Work of the AG-MEMOD Partnership • Focus on analysis of policy impacts • Dimensions of the sector modelled • Commodity market modelling • Summary

  3. AG-MEMOD Partnership • Development of models for and in member states, • Pan-EU with 14 teams at present, • Focus on economic analysis of impacts, • Modelling transparent, • Results for public use, • Support from Commisson and member states.

  4. Focus on Policy Impacts • Listing of potential policy scenarios • Outcome criteria, include impacts on: • Markets: EU, member states & global • Agricultural incomes: EU & members • Land use, and eventually • Environment. • Results for each year to 10 year horizon

  5. Modelling approach • Commodity market models • Recursive dynamic, • Multi-product • Partial equilibrium • Inputs, Environment and Agricultural incomes also in model

  6. Methodology • Economic analysis prime consideration • Econometric estimation of equations • Guidance from Advisory Groups • Modelling templates & agreements • Complementarities with programming and Applied General Equilibrium models

  7. Commodity models • Start with flow charts and template • Policy variables explicitly included • EUROSTAT primacy in realm of data • Econometrically estimated in and for each member state, • 27 commodity models estimatedso far

  8. Linkage of country models • Linked and solved in prices & trade • Price transmission equations estimated • Combined EU model linked to global markets

  9. Other CAP Instruments 15 Country Models Area harvested Production Yield Beginning Stock Feed Use Domestic Use Net Export Supply EU net export supply Non-Feed Use Ending Stock Imports Exports Price Linkage equations AG-MEMOD key price >, =, < World Prices EU Intervention Price WTO EU Net Export demand

  10. Summary • Project a response to public needs • Quantification of policy impacts • Policy & market detail explicit • Results consistent across markets • Projections: each member state & EU • Integration of model builders & users

  11. Take Home Message Full paper & other information on AG-MEMOD: http://www.tnet.teagasc.ie/agmemod/public.htm

  12. Take Home Message Policy makers, if they wish to forecast the response of citizens, must take the latter into their confidence.’ Robert E. Lucas, Jr. 1976, Econometric Policy Evaluation: a Critique. http://www.tnet.teagasc.ie/agmemod/public.htm

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