03 Jun 2013

Factor Markets in General Computable Equilibrium Models

Martin Banse / Lindsay Shutes / Peter Dixon / Hans van Meijl / Maureen Rimmer / Andrzej Tabeau / Geert Woltjer / Andrea Rothe

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One objective of Computable general equilibrium (CGE) models is the analysis of economy-wide effects of policy measures. The focus of the Factor Markets project is to analyse the functioning of factor markets for agriculture in the EU-27, including the Candidate Countries. While agricultural and food markets are fully integrated in a European single market, subject to an EU-wide common policy, the Common Agricultural Policy (CAP), this is not the case for the agricultural factor markets capital, labour and land. There are partly serious differences with regard to member state regulations and institutions affecting land, labour and capital markets. The presentation of this heterogeneity of factor markets amongst EU Member States have been implemented in the CGE models to improve model-based analyses of the CAP and other policy measures affecting agricultural production.

This final report comprises the outcome of a systematic extension and improvement of the Modular Applied GeNeral Equilibrium Tool (MAGNET) model starting from an overview of the current state of the art to represent factor markets in CGE models to a description of work on labour, land and capital in MAGNET.

Martin Banse and Andrea Rothe are researchers at the Thünen-Institute of Market Analysis, Braunschweig, Germany. Lindsay Shutes, Hans van Meijl, Andrzej Tabeau and Geert Woltjer are researchers at LEI, which is part of Wageningen University and Research Centre, The Hague, in the Netherlands. And Peter Dixon and Maureen Rimmer are researchers at Monash University, Centre of Policy Studies, Clayton, Australia.