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Constructing a SAM for Ireland. Ana Corina Miller Trinity College Dublin. Research Questions. 1.Trade liberalization impacts WTO agricultural trade policy reforms – Doha Round 2.Further reform of the CAP 3.Climate change ( Carbon levy )

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constructing a sam for ireland

Constructing a SAM for Ireland

Ana Corina Miller

Trinity College Dublin

slide2

Research Questions

1.Trade liberalization impacts WTO agricultural trade policy reforms – Doha Round

2.Further reform of the CAP

3.Climate change (Carbon levy)

4.Bio-fuels production impacts on land-use and cereal prices

Capture the distributional effects on farm/non-farm households of different food related shocks on the economy

Discuss the construction of the tool box

methodology and plan of work
Methodology and Plan of Work

Constructing a CGE model of the Irish economy with a detailed

representation of the Irish agri-food sector and to link it to a

Microsimulation model

Steps:

  • Building a Social Accounting Matrix (SAM)
  • Building the Computable General Equilibrium Model (CGE)
  • MS – “building” and linking a Microsimulation model to the CGE
  • Simulations
what s a sam
What’s a SAM?

Main data structure underlying a CGE Model

An internally consistent accounting framework

A snapshot of the economy at a certain time

Used to calibrate the CGE model to the base year data by determining key parameters

Construction closely related to the modelling framework and policy questions

why a new sam
Why a new SAM ?
  • Make use of the new I/O table 2005
  • Use the NFS 2005 instead of Capri estimation for the agricultural sub-matrix
  • Facilitate the link the Agro SAM with the NFS at micro level
  • The farm households in the HBS 2005 overlap with those in the NFS 2005
steps in constructing a sam for ireland
Steps in constructing a SAM for Ireland
  • MACRO Social Accounting Matrix (SAM)
  • Complete but unbalanced AGRO SAM
  • MICRO SAM
  • Balance SAM
macro sam
MACRO SAM
  • Accounts
  • 55 Activities producing 55 Commodities
  • 2 Factors of production –Labour and Capital
  • 3 Institutions – Households, Government and Enterprises
  • 3 External Account – UK, REU and ROW
  • 1 Tax account
  • 1 Savings/Investments account

MACRO SAM – 65 Square Balanced Matrix.

main source of data for sam
Main Source of Data for SAM
  • National Accounts System (CSO2009)
  • 2005 Input-Output Table (CSO2009)
  • Annual Accounts by Current Account (AACA) (CSO2009)
  • Annual Review and Outlook for Agriculture and Food (AROAF) (Department of Agriculture and Food 2007),
  • Household Budget Survey 2004 –2005 (CSO2005)
  • Statistical Year Book of Ireland (SYB2008)
  • Marketing Margins rate derived from the 2005I/O Table
  • National Farm Survey 2005 (NFS2005)
agro sam
AGRO SAM
  • Agricultural, Hunting and Related Services – 12 sectors producing 13 commodities
  • Manufacture of Food and Beverages – 10 sectors producing 10 commodities
  • Factors of Production – Labour, Capital, Land
  • Taxes – Tax on production, Taxes on products, VAT, Income/Corporate Tax and Import Duties
  • Subsidies
  • Trade and Transport Margins
  • Export Refunds

AGRO SAM – 171 Square Balanced Matrix

agro sam1
AGRO SAM
  • OIIA 2009 identifies 18 types of commodities: Cattle, Pigs, Sheep, Horses, Poultry, Milk, Other Products, Barley, Wheat, Oats, Potatoes, Sugar Beet, Mushrooms, Other Fresh Vegetables, Fresh Fruit, Turf, Other Crops and Forage Plants -----12 industries used in the SAM
  • Output Matrix
agro sam2
AGRO SAM

Intermediate Consumption Matrix

  • Data source OIIA2006 – 11 consumption factors
  • Supply Balance Table (CSo2009)
  • Use NFS2005 to calculate, for each type of farm, the shares of intermediate goods used in the farm
agro sam3
AGRO SAM

Factor of Production – Land

  • NFS2005 – shares of farm livestock
agro sam4
AGRO SAM
  • Factors of production – Labour- for each farm is calculated the share of labour using the standard man day (SMD) variable.
  • Factor of production – Capital is allocated across the 12 new agricultural sectors according to the capital depreciation variable reported in NFS2005
  • A control tool in disaggregating the value added was Henry estimates – approximately 50% is attributed to the labour input, 30% to capital and the remaining 20% to land
further work
Further work

Treatment of land – wide use, limited use and very limited use (forestry)

Treatment of farm households - possible disaggregation: dairying, dairying & other, cattle rearing, cattle & other, mainly sheep, mainly tillage

Integration of CAP policy instruments

Labour supply would be elastic and mobile

slide17

Macro-Micro Link

The basic problem encountered is how to link the microdata from the HBS/NFS surveys to the CGE model.

– Integration approach, Cockburn (2001)

Reconcile the survey data with the accounts in the SAM

The SAM is rebalanced – Cross Entropy Method (Robilliard and Robinson, 2003)

The farm /non-farm households’ behaviour is represented by LES function and the differences in marginal shares of goods

consumption determines the response that household takes