Modelling Government Procurement in a General Equilibrium Framework

Transcription

1 Global Trade Analysis Project Modelling Government Procurement in a General Equilibrium Framework Presented by Angel Aguiar Based on work with Caitlyn Carrico, Thomas Hertel, Zekarias Hussein, Robert McDougall, and Badri Narayanan This presentation stems from a project funded by the European Commission, but the views expressed here are my own. Center for Global Trade Analysis Department of Agricultural Economics, Purdue University 403 West State Street, West Lafayette, IN USA contactgtap@purdue.edu

2 Motivation Government purchases are important in the context of GDP and trade flows Potential to further affect trade flows Limited understanding of impacts due to lack of data and model Overall Objective Develop a global general equilibrium framework to help in the analysis of policies affecting public procurement 2

3 Specific Objectives Improve government representation Identify government investment Identify the origin of imports By end use: intermediate, private, government, and investment Modifications to the GTAP model Account for data extensions and procurement regimes 3

4 New Framework Extends the GTAP Data Base Identifies government investment Identifies the origin of imports by end use Extends the GTAP model Accounts for data extensions above Includes procurement regimes, one of which has home bias 4

5 Investment disaggregation Intermediate (Sector 1,, Sector 57) Final demands Net exports Private Investment Government Investment Sector 1 Sector 57 Value added Final demands = Private + Government Public investment: total from EUROSTAT, OECD, UN; Detailed IO tables (Australia, Canada, France, Japan, US) 5

6 Standard GTAP Data Base VIFM(i,j,r) are the value of i imports by sector j in region r VIGM(i,r) are the value of i imports by government VIPM(i,r) are the value of i imports by private household VIMS(i,s,r) are the total imports from region s in region r jj VVVVFFMM ii, jj, rr + VVVVVVVV ii, rr + VVVVVVVV(ii, rr) = ss VVVVVVVV(ii, ss, rr) 7

7 GTAP MRIO Data Base s VIFMS(i,j,s,r) VIFM(i,j,r) s VIGMS(i,s,r) VIGM(i,r) s VIPMS(i,s,r) VIPM(i,r) j VIFMS(i,j,s,r) VIGMS(i,s,r) VIPMS(i,s,r) VIMS(i,s,r) 8

8 Building GTAP-MRIO TASTE -- UN COMTRADE IMPORTS GTAP DATA BASE GTAP Imports according to BEC Rebalance with Rest of GTAP DB GTAP MRIO UNSD HS-BEC CONCORDANCE Input Process Output 9

9 Import demand by Government services and Investment (in millions of USD) EU28 Canada ROW Gsvcs CGDS Gsvcs CGDS Gsvcs CGDS Supply\ Demand EU28-PRIM EU28-OMF EU28-CNS EU28-Osvcs EU28-Gsvcs Canada-PRIM Canada-OMF Canada-CNS Canada-Osvcs Canada-Gsvcs ROW-PRIM ROW-OMF ROW-CNS ROW-Osvcs ROW-Gsvcs

10 Model Modifications Extends the standard GTAP Specifies two public procurement regimes Regime 1 is competitive Regime 2 has home bias Includes the origin of imports by end use Value added Qo (osg, CGDS) leontief Intermediates leontief Regime 1 Regime 2 ces ces Domestic Imp. Dom. Imports ces ces Region 1 N Region 1 N 12

11 Valuation and home bias In standard GTAP Market prices; agent prices New model adds valuation Veridical prices; to depict preference via phantom taxes Phantom taxes do not increase collection Subsidize domestic production and tax imports; Sum is equal to zero Home bias is assumed Every region has a 50% home bias, EU has 20% home bias w.r.t. other regions, and no home bias w.r.t. EU countries.

12 Illustrative Application 14 region x 22 sector aggregation EU28, Canada, USA, China, Japan, Korea, India, Brazil, Russia, Turkey, Rest of America, Africa, Rest of Asia, and ROW OSG separately identified Closure assumptions: Full-employment Investment is determined by expected rates of return The policy scenario: Reduce home bias in Canada to match that of the EU 14

13 Results Region Allocative Efficiency Terms of trade Total (2011 USD billion) European Union Canada Rest of the World Modest positive effect on Canada s GDP (0.11%). Reducing home bias reduces the domestic sales to the government and increases sales abroad. 15

14 Percentage change in imports after policy simulation EU28 Canada ROW Gsvcs CGDS Gsvcs CGDS Gsvcs CGDS Supply\ Demand EU28-PRIM 0% 0% 0% 0% 0% 65% -1% 47% 0% 0% 0% 0% EU28-OMF 0% 0% 0% 0% 0% 27% 0% 19% 0% 0% 0% 0% EU28-CNS 0% 0% 0% 0% 0% 52% 0% 52% 0% 0% 0% 0% EU28-Osvcs 0% 0% 0% 0% 0% 44% 0% 48% 0% 0% 0% 0% EU28-Gsvcs 0% 0% 0% 0% -1% 48% -1% 0% 0% 0% 0% 0% Canada-PRIM 2% 2% 1% 1% 1% 1% 1% 1% Canada-OMF 1% 1% 1% 1% 1% 1% 1% 1% Canada-CNS 1% 1% 1% 1% 1% 1% 1% 1% Canada-Osvcs 1% 1% 1% 1% 1% 1% 1% 1% Canada-Gsvcs 2% 2% 2% 0% 2% 2% 2% 0% ROW-PRIM 0% 0% 0% 0% 0% 68% -1% 47% 0% 0% 0% 0% ROW-OMF 0% 0% 0% 0% 0% 29% 0% 19% 0% 0% 0% 0% ROW-CNS 0% 0% 0% 0% 0% 52% 0% 52% 0% 0% 0% 0% ROW-Osvcs 0% 0% 0% 0% 0% 45% 0% 48% 0% 0% 0% 0% ROW-Gsvcs 0% 0% 0% 0% -1% 48% -1% 0% 0% 0% 0% 0% 16

15 Limitations Private and public split could be further improved with more detailed information Local preference is assumed, need actual estimates of home bias 17

16 Conclusions Data Developments Official MRIO Private and public investment differentiation Data aggregation package available to GTAP Board Members, data contributors and subscribers Model Developments Considers imports by country of origin Uses procurement regimes RunGTAP application available to GTAP Board Members, database Contributors and Subscribers 18

17 Global Trade Analysis Project Questions or comments? Reference: GTAP Working Paper No Center for Global Trade Analysis Department of Agricultural Economics, Purdue University 403 West State Street, West Lafayette, IN USA 19