Definition
One economy, no policy intervention
PRIVEXP: private household expenditure
GOVEXP: government expenditure
SAVE: saving
VOA: value of output at agent's price
VDGA: value of domestic government purchases, evaluated at agent's price
VDPA: value of domestic private household purchases, evaluated at agent's price
VDFA: value of domestic firm purchases, evaluated at agent's price
In the basic GTAP model, the price of saving is chosen as numeraire, and the saving - investment identity is not imposed, but used to test Walras's law
NETINV: net investment
Note: it shows the flow of money (the opposite of flow of materials)
One economy, with tax
In general:
TAXES: taxes
VDPM: value of domestic private household purchases, evaluated at market price
Tax is computed by comparing the value of a given transaction, evaluated at agents' and market price.
TPD: power of ad valorem tax
TPD = VDPA / VDPM
DTAX: tax revenue
DTAX = VDPA - VDPM
PM: market price
Tax on provide household purchase
PPD: private household's price
QPD: private household's demand
DPTAX: tax on commodity purchased by households
Tax on output
PS: supply price
QO: supply quantity
PTAX: tax on production of commodity
Multi-region open economy
VXMD: value of export, measured at market price
VIFA: value of import, measured at agent price
Note: when firms import commodity to be used in production, they still need to pay additional consumption tax (included in TAX)
In GTAP model, there is a transportation sector to account for the difference between fob and cif values for a commodity shipped along a particular route
GTAP model uses Armington assumption in trade
Firm first decide the source of imports, then based on the composite import price, they decide the optimal mix of imported and domestic goods.
It contains conditional demand for both domestic and imported intermediate inputs.
VIPA: value of private household's purchase of imported goods, measured at agent price
VIGA: value of government's purchase of imported goods, measured at agent price
In multi-region model, saving becomes GLOBAL saving, or the saving are measured at global basis with the common price of saving commodity
The rest of world pay the regional household by:
- VXMD: value of exports of commodity i from region r to region s, valued at exporter's domestic price
- MTAX: import tax
- XTAX: export tax
TXS: tax
VXWD: value of exports of commodity i from region r to region s, valued at FOB price (world price)
TXS(i, r, s) = VXMD(i, r, s) / VXWD(i, r, s)
Export tax
VXWD(i, r, s) = VXMD(i, r, s) + XTAX(i, r, s)
XTAX: tax revenue
Here consider the home country (VXMD) exports to foreign country (VXWD), it collects the export tax (XTAX) before transportation actually happens, so we use FOB price to measure VXWD.
Note: everything happens on the land of home country, before the seller has shipped commodities away from home country
Import tax
VIMS(i, s, r) = VIWS(i, s, r) + MTAX(i, s, r)
VIMS: imports of commodity i from region s to region r, valued at importer's domestic price
VIWS: imports of commodity i from region s to region r, valued at CIF price
MTAX: tax revenue
Here consider the home country (VIMS) imports from the foreign country (VIWS), it collects the import tax (MTAX) after the transportation actually happens, so we use CIF price to measure VIWS.
Note: again, everything happens on the land of home country, after the buyer has shipped commodities to home country
Note
- Brockmeier, Martina. A graphical exposition of the GTAP model. No. 1236-2016-101374. 2001.