Data issues in general equilibrium modelling

In recent years global general equilibrium (GE) models have been used to analyse policy issuessuch as trade liberalisation, regional integration and environmental policies. While a globalCGE model is an excellent tool to perform a comprehensive analysis of such policies, it requiresan enormous amount of data to calibrate or parameterise the model itself. Quality differences inthe data sets might affect the results of the model simulation. Identifying and removingproblems in the database is an important task for the effective use of a CGE model.In this paper, we suggest an approach to detect and remove major inconsistencies from thedatabase of a CGE model. To illustrate, we examine and modify selected interindustrytransactions in the GTAP version 5 database, a general equilibrium database of the globaleconomy. The revised database was evaluated against the original by undertaking technicalchange and trade liberalisation experiments using Global Trade Analysis Project (GTAP)model. Results show that estimates using the modified database are more credible than thosefrom the original database.