Comparing PE and CGE Supply-Side Specifications in Models of the Global Food System

Sherman Robinson, Hans van Meijl, Hugo Valin, Dirk Willenbockel, Shinichiro Fujimori, Toshihiko Masui, Ron Sands, Marshall Wise, Katherine Calvin, Peter Havlik, Daniel Mason d'Croz, Andrzej Tabeau, Aikaterini Kavallari, Christoph Schmitz, Jan Dietrich and Martin von Lampe

No 332382, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: This paper compares the theoretical and functional specification of production in partial equilibrium (PE) and computable general equilibrium (CGE) models of the global agricultural and food system included in the AgMIP model comparison study. The two model families differ in their scope—partial versus economywide—and in how they represent technology and the behavior of supply and demand in markets. The CGE models are “deep” structural models in that they explicitly solve the maximization problem of consumers and producers, assuming utility maximization and profit maximization with production/cost functions that include all factor inputs. The PE models divide into two groups on the supply side: (1) “shallow” structural models, which essentially specify supply curves with no explicit maximization behavior, and (2) “deep” structural models that provide a detailed specification of technology and optimizing behavior by producers, but do not include all factor inputs in production. While the models vary in their specifications of technology, both within and between the PE and CGE families, we consider two stylized theoretical models to compare the behavior of crop yields and supply functions in CGE models with their behavior in shallow structural PE models. We find that the theoretical responsiveness of supply to changes in prices can be similar, depending on parameter choices that define the behavior of implicit supply functions over the domain of applicability defined by the common scenarios used in the AgMIP comparisons. In practice, however, the applied models are more complex and differ in their empirical sensitivity to variations in specification—comparability of results given parameter choices is an empirical question. To illustrate the issues, sensitivity analysis is done with one global CGE model, MAGNET, to indicate how the results vary with different specification of technical change, and how they compare with the results from PE models.

Keywords: Research Methods/ Statistical Methods; Food Security and Poverty (search for similar items in EconPapers)
Pages: 41
Date: 2013
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