Creating a Disaggregated CGE Model for Trade Policy Analysis: GTAP-MVH

Thousands of economists spread across almost every country use the GTAP model to analyse trade policies including trade wars and trade agreements. GTAP has an impressive regional coverage (140 countries), but the standard commodity coverage (57 commodities/industries) can cause frustration when tariffs on narrowly defined products are being negotiated. This article sets out a method for disaggregating commodities/industries in computable general equilibrium models such as GTAP and applies it to GTAP's motor vehicle sector. The method makes use of readily available highly disaggregated trade data supplemented by detailed input-output data where available and data from a variety of other sources such as commercial market reports.