comprehensive model for examining the effects of policies on China's national and regional food economies, as well as household income and poverty.
CAPSiM includes two major modules for supply and demand balances for each of 19 agricultural commodities. Supply includes production, import, and stock changes. Demand includes food demand (specified separately for rural and urban consumers), feed demand, industrial demand, waste, and export demand. Market clearing is reached simultaneously for each agricultural commodity and all 19 commodities (or groups).
Production equations, which are decomposed by area and yield for crops and by total output for meat and other products, allow producers' own- and cross-price market responses, as well as the effects of shifts in technology stock on agriculture, irrigation stock, three environmental factors—erosion, salinization, and the breakdown of the local environment—and yield changes due to exogenous shocks of climate and other factors (Huang and Rozelle, 1998b; deBrauw et al., 2004). Demand equations, which are broken out by urban and rural consumers, allow consumers' own-and cross-price market responses, as well as the effects of shifts in income, population level, market development and other shocks (Huang and Rozelle, 1998a; Huang and Bouis, 2001; Huang and Liu, 2002).
Most of the elasticities used in CAPSiM were estimated econometrically at CCAP using state-of-the-art econometrics, including assumptions for consistency of estimated parameters with theory. Demand and supply elasticities vary over time and across income groups. Recently, CAPSiM shifted its demand system from double-log to an "Almost Ideal Demand System" (Deaton and Muellbauer, 1980).
CAPSiM generates annual projections for crop production (area, yield and production), livestock and fish production, demand (food, feed, industrial, seed, waste, etc), stock changes, prices and trade. The base year is 2001 (average of 2000-2002) and is currently being updated to 2004 The model is written in Visual C++.
A.5.5.3 Application
CAPSiM has been frequently used by CCAP and its collaborators in various policy analyses and impact assessments. Some examples include China's WTO accession and implications (Huang and Rozelle, 2003; Huang and Chen, 1999), trade liberalization, food security, and poverty (Huang et al., 2003; Huang et. al., 2005a and 2005b), R&D investment policy and impact assessments (Huang et al., 2000), land use policy change and its impact on food prices (Xu et. al., 2006), China's food demand and supply projections (Huang et. al., 1999; Rozelle et al., 1996; Rozelle and Huang, 2000), and water policy (Liao and Huang, 2004).
A.5.5.4 Uncertainty
Tables A.5.8 and A.5.9 below summarize points related to uncertainty in the model, based on the level of agreement and amount of evidence. |
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A.5.6 Gender (GEN)-Computable General Equilibrium (CGE)
A.5.6.1Introduction
The GEN-CGE model developed for India is based on a Social Accounting Matrix (SAM) using the Indian fiscal year 1999-2000 as the base year (Sinha and Sangeeta, 2001). Generally SAMs are used as base data set for CGE Models where one can take into account multi-sectoral, multi-class disaggregation. In determining the results of policy simulations generated by CGE model, a base-year equilibrium data set is required, which is termed calibration. Calibration is the requirement that the entire model specification be capable of generating a base year equilibrium observation as a model solution. There is a need for construction of a data set that meets the equilibrium conditions for the general equilibrium model, viz. demand equal supplies for all commodities, nonprofits are made in all industries, all domestic agents have demands that satisfy their budget constraints and external sector is balanced. A SAM provides the most suitable disaggregated equilibrium data set for the CGE model.
The SAM under use distinguishes different sectors of production having a thrust on the agricultural sectors and different factors of production distinguished by gender. The workers are further distinguished into rural, urban, agricultural, nonagricultural and casual and regular types. The other important feature of the SAM is the distinction of various types of households and each household type being identified with information on gender worker ratios. As the model incorporates the gendered factors of production, it is enabled to carry out counterfactual analysis to see the impact of trade policy changes on different types of workers distinguished by gender, which in turn allows the study of welfare of households again distinguished by ratio of workers by gender. Households are divided into rural and urban groups, distinguished by monthly per capita expenditure (MPCE) levels. Rural households include poor agriculturalists, with MPCE less that Rs. 350; nonpoor agriculturalists (above Rs. 351); and nonagriculturalists at all levels of income. Urban households are categorized as poor, with MPCE of less than Rs. 450 and the nonpoor, with MPCE of between Rs. 451 and 750.
A.5.6.2 Model structure and data
The GEN-CGE model follows roughly the standard neoclassical specification of general equilibrium models. Markets for goods, factors, and foreign exchange are assumed to respond to changing demand and supply conditions, which in turn are affected by government policies, the external environment, and other exogenous influences. The model is Walrasian in that it determines only relative prices and other endogenous variables in the real sphere of the economy. Sectoral product prices, factor prices, and the foreign exchange rate are defined relative to a price index, which serves as the numeraire. The production technology is represented by a set of nested Cobb-Douglas and Leon-tief functions. Domestic output in each sector is a Leontief function of value-added and aggregate intermediate input use. Value-added is a Cobb-Douglas function of the primary factors, like capital and labor. Fixed input coefficients are specified in the intermediate input cost function. The model |