Computable General Equilibrium Modelling and the Evaluation of Agricultural Policy

This thesis is concerned with computable general equilibrium modelling and evaluation of agricultural policy in a global context. Particular emphasis has been given to the EU's Common Agricultural Policy, reform of which was an important element in the successful conclusion of the Uruguay Round (UR), and which is to be subject to further reforms underAgenda 2000. Nevertheless, attention has also been given to modelling the effects of other Uruguay Round outcomes in manufactures and services, so that the reform of the CAP can be assessed within the liberalised global setting.Chapter 1 describes the UR agreement in general, and the Agricultural Agreement in detail. Chapter 2 discusses the construction of computable general equilibrium models. This informs the consideration given in Chapter 3 to the Global Trade Analysis Project (GTAP) model and to results from several papers that use the model for the analysis of the UR, as well as other UR CGE models. The GTAP version 2 database is examined in Chapter 4 (the latest version, released in June 1998, is covered in Chapter 7). Chapter 5 gives attention to the finer detail of the standard GTAP model, and describes themodifications and extensions made to this model, such as the modelling of partiallyspecific- factors and endogenous subsidy rates and a means of decomposing welfare changes in the GTAP model. Chapter 6 presents the resuUs from modelling the Uruguay Round with the aggregation and model developed in Chapters 4 and 5. The main resuUs for these simulations show that the global welfare gain and regional gains to the EU, the USA and Japan are comparable to studies discussed in Chapter 3. Chapters 7 and 8 use the most recent GTAP database, which gives wider coverage of regions, sectors and factors than the version used in earlier chapters. Chapter 7 augments the model of Chapter 5 with production quotas for milk and sugar, explicit modelling of compensation and headage payment, intervention prices and support buying, and detailed representation of the EU export subsidy commitments. Chapter 8 reports the resuUs of simulations using this in a model 'projected' to 2005. The main resuUs are that the UR leads to welfare losses in the EU, which are partially reduced through Agenda 2000, and that in all scenarios, the redistributional impacts of reforms are far greater than the overall welfare changes. Finally, Chapter 9 offers some conclusions and suggestions for future research.