Theoretical Structure of Dynamic GTAP
Purdue University GTAP Technical Paper No. 17
Posted: 17 Aug 2012
Date Written: December 15, 2000
This paper documents the foreign asset ownership and investmen theory of the dynamic GTAP model (GTAP-Dyn). The new investment theory offers a disequilibrium approach to modeling endogenously international capital mobility. It permits a recursive solution procedure, a feature that allows easy implementation of dynamics into any static AGE model without imposing limitations on the model's size. The method involves treating time as a variable, not an index. Having time as a variable allows the construction of dynamic GTAP with minimum modification to the existing structure of GTAP, by separating the theory of static GTAP from the length of run.
Keywords: Dynamics, asset onwership, international capital mobility, investment, adaptive expectations
JEL Classification: D58
Suggested Citation: Suggested Citation