Table Of ContentAdvances in Applied General Equilibrium Modeling
Glyn Wittwer
Editor
Multi-regional
Dynamic General
Equilibrium
Modeling of the
U.S. Economy
USAGE-TERM Development
and Applications
Advances in Applied General Equilibrium
Modeling
Series editors
James Giesecke, Victoria University, Melbourne, Australia
Peter B. Dixon, Victoria University, Melbourne, Australia
Robert Koopman, World Trade Organization, Geneva, Switzerland
This series has a companion series in SpringerBriefs in Applied General
Equilibrium Modeling.
The series publishes advances in the theory, application, parameterisation and
computationofappliedgeneralequilibrium(AGE)models.AGEanalysisisnowan
essential input in many countries to the discussion of a wide range of economic
topics relevant to public policy. This reflects the capacity of AGE models to carry
extensive economic detail, their flexibility in accommodating new policy-relevant
theoryanddata,andtheircapacitytoprojecteconomicoutcomesforalargenumber
of macroeconomic and microeconomic variables.
Topics in AGE modeling addressed by the series include: macroeconomic
forecastingandadjustment;publicfinance;economicgrowth;monetarypolicyand
financial markets; environmental policy; energy policy; income distribution and
inequality; global modeling; country-specific modeling; regional modeling;
economic effects of natural disasters and other catastrophic events; productivity;
demography; foreign direct investment; economic development; model solution
algorithms and software; and topics in estimation, calibration and validation.
AGEapplicationsareincreasinglymulti-disciplinary,spanninginputsfromsuch
diverse fields as engineering, behavioral psychology, energy modeling, land use
modeling, demography, and climate modeling. The series allows for the compre-
hensive documentation and careful exposition of not only the AGE models
themselves, but also the inter-disciplinary inputs to the modeling, and the
interactions between each.
For AGE modelers, the series provides a format supporting: clear exposition of
data work, attention to the theoretical modeling of relevant policy detail, and
thorough discussion of simulation results. This aids both academic and policy
readerships.
Academic readers will appreciate: the capacity to see details of the full
complexity of relevant components of model equation systems; comprehensive
documentationofdatamanipulationalgorithms;supportinganalysisanddiscussion
ofmodelinputandclosureassumptions;andcarefuldiscussionofresultsgrounded
in AGE theory, data and closure assumptions.
Policy readers will appreciate: a format that supports the reporting of the
comprehensive set of model outputs of interest to policy makers; discussion of
elements of the theory and data that exert a heavy influence on research findings;
and nuanced and qualified discussion of the policy implications of AGE research.
More information about this series at http://www.springer.com/series/13860
Glyn Wittwer
Editor
Multi-regional Dynamic
General Equilibrium
Modeling of the
U.S. Economy
USAGE-TERM Development
and Applications
123
Editor
GlynWittwer
Centreof Policy Studies
Victoria University
Melbourne, VIC
Australia
ISSN 2520-8268 ISSN 2520-8276 (electronic)
Advances in AppliedGeneral Equilibrium Modeling
ISBN978-3-319-58864-3 ISBN978-3-319-58866-7 (eBook)
DOI 10.1007/978-3-319-58866-7
LibraryofCongressControlNumber:2017939616
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Preface
The compilation of regional data so as to prepare an early version of
USAGE-TERM did not seem at first to be a massive task. It soon became evident
that proper documentation would be time-consuming. Detailed documentation,
technical refinements, and model applications have taken a number of years.
USAGE-TERM follows in the footsteps of the dynamic USAGE model of the
US economy developed by Peter Dixon and Maureen Rimmer over many years.
Many of the research memoranda, working papers, and publications authored by
Peter and Maureen in devising the USAGE model are cited in the volume. Some
of the model enhancements implemented in USAGE have been adopted in
USAGE-TERM.
USAGE-TERM development has been the culmination of a team effort. Peter
DixonandMaureenRimmerhavebroughtthemodeltolifethroughcommissioned
projectsoriginatingfromvariousUSfederaldepartments.MarkHorridgepioneered
the TERM approach to CGE modeling. The first application of TERM concerned
drought in Australia late in 2002. More recently, Mark and other GEMPACK
specialists, Michael Jerie, Florian Schiffmann, and Dean Mustakinov, have
responded to the growing technical demands of model users as the theory and
database of the model have grown.
Without clients, many of the enhancements of USAGE-TERM would not have
been developed. The contributors to this volume are grateful to CREATE at USC,
the MITRE Corporation, the Department of Homeland Security, and the US
Department of Commerce for their commissioned projects using the model.
The Centre of Policy Studies (CoPS) moved to Victoria University early in
2014. We are grateful to Vice-Chancellor Peter Dawkins for the opportunity to
continue research in a new setting.
v
vi Preface
The saddest recent event in CoPS has been the passing of Ken Pearson in May
2015. He was a selfless, devoted, brilliant colleague. His grand vision of
GEMPACKsoftware as atool tospare theCGE modelerfrom the need toacquire
specialist programming skills has enlarged the CGE community. Every working
day at CoPS, we use the software that remains Ken’s legacy.
Melbourne, Australia Glyn Wittwer
January 2017
Contents
1 Beyond Regional Input–Output Modeling.... .... .... ..... .... 1
Glyn Wittwer, Janine Dixon and John Madden
Part I Sectoral Detail in USAGE-TERM
2 Agriculture and Mining in Regional United States. .... ..... .... 21
Glyn Wittwer
3 Manufacturing Industries in the United States.... .... ..... .... 41
Glyn Wittwer
4 Regional Electricity Supply in the United States... .... ..... .... 65
Glyn Wittwer
5 Regional Health Care, Education, International Trade,
Other Services and Household Consumption . .... .... ..... .... 83
Glyn Wittwer
6 Tourism and Transport in a CGE Model
and an Illustrative Application. .... .... .... .... .... ..... .... 99
Glyn Wittwer
Part II Potential Household and Fiscal Extensions
7 Enhancing the Links Between Income Sources, User
Expenditures and Taxes in a CGE Database . .... .... ..... .... 115
Janine Dixon
8 Fiscal Accounts in Regional CGE Modeling .. .... .... ..... .... 135
John Madden
vii
viii Contents
Part III Model Preparation
9 Preparing a Database for Dynamic CGE Modeling .... ..... .... 153
Glyn Wittwer
10 Top-Down Extensions to Represent Counties
and Congressional Districts and Moving to Bottom-Up. ..... .... 173
Mark Horridge and Glyn Wittwer
Part IV Model Applications
11 Modeling California’s Drought. .... .... .... .... .... ..... .... 195
Glyn Wittwer
12 The Economic Effects of a Hypothetical Nuclear Attack
on Downtown LA .. .... ..... .... .... .... .... .... ..... .... 211
Peter B. Dixon, Maureen T. Rimmer and Glyn Wittwer
About the Authors . .... .... ..... .... .... .... .... .... ..... .... 229
Index .... .... .... .... .... ..... .... .... .... .... .... ..... .... 233
Contributors
Note: All authors are at the Centre of Policy Studies
Janine Dixon Centre of Policy Studies, Victoria University, Melbourne, VIC,
Australia
Peter B. Dixon Centre of Policy Studies, Victoria University, Melbourne, VIC,
Australia
Mark Horridge Centre of Policy Studies, Victoria University, Melbourne, VIC,
Australia
John Madden Centre of Policy Studies, Victoria University, Melbourne, VIC,
Australia
Maureen T. Rimmer Centre of Policy Studies, Victoria University, Melbourne,
VIC, Australia
Glyn Wittwer Centre of Policy Studies, Victoria University, Melbourne, VIC,
Australia
ix
