Background

1. From Partial Equilibrium to General Equilibrium Models Linking of Databases by Means of Entropy Techniques • Model Flow: • Construction of SAMs in ESA95 Format • Compilation of Priors for the AgroSAMs based on the CAPRI Database • Balancing the AgroSAMs • Background • Interactions between agriculture and processing industries came into focus of researchers. • Many of the widely used modelling systems and databases do not support such studies in the desirable detail. • IPTS launched on request of DG TRADE an in-house project on the compilation of Social Accounting Matrices with a detailed representation of the agricultural sector (AgroSAM). • This project combines agricultural sector data from an existing partial equilibrium model (CAPRI) with economy-wide supply and use tables provided by Eurostat. • Research Objective • The main aims of this project are: • to construct Social Accounting Matrices (SAMs) for the EU27 Member States which would allow analysing the economic effects of the CAP reform within and beyond agriculture. • to contribute to existing tools for quantitative policy analysis that are built on SAMs, like computable general equilibrium models (CGE). • to provide a data-link between agricultural sector models and multi-sector models • Datasets Used • Supply and use tables (SUT) and input output tables (IOT) from Eurostat – 59 sectors • Macro aggregates from Eurostat (NAMA) - 31 sectors • National accounts by institutional sectors (NASA) • CAPRI Database – 60 sectors • Main Challenges • While the agricultural sector is well documented, data about agricultural processing industries proved to be more difficult to obtain • SUTs are available for 24 EU Member States only • The year 2001 has the best data coverage; more recent years are not as well covered • The large number of variables underlying the AgroSAMs causes computational difficulties (compilation time) • Supply-tables (purple) and Use-tables (blue) were combined with data on flows between domestic institutions (NASA, green) • Agriculture is represented only as one row and one column • Aggregate values for agriculture from CAPRI (purple) and ESA95 (blue) deviate in some cases substantially • Need to formulate a balancing procedure to adjust agricultural data to macro-total indicated by ESA95 • Cross-entropy procedure • Final AgroSAM entry is defined as prior information times a correction factor • Deviation from prior information depends on exogenously set standard deviation (“SIG” in left figure) • Accounting identities are imposed on all entries of the AgroSAM Results: As final result, a set of balanced agricultural social accounting matrices (AgroSAMs) consistent with national supply and use tables is provided. They give a more detailed picture of the agricultural sector according to the information derived from the highly disaggregated CAPRI database. Currently the data available allow the construction of AgroSAMs for 24 EU Member States for the year 2001. The extension to 27 Member States and a more recent year is in preparation. Use: AgroSAMs can be used as database for a variety of modelling systems currently used by analysts within European Commission: SAMs and corresponding input-output tables serve as standard format for general equilibrium models like GLOBE or GTAP (Global Trade Analysis Project), which is used for instance by DG-TRADE. Partial modelling systems (like CAPRI) which rely on sector-specific data will also benefit from the usage of the AgroSAMs because of the implicit macro-economic consistency of any derived sub-set. Contact Dr. Marc Müller and Dr. Ignacio Pérez Domínguez European Commission • Joint Research Centre Institute for Prospective Technological Studies Tel. +34 954488348 • Fax +34 954488434 E-mail: marc.mueller@ec.europa.eu