The construction, calibration and interpretation of IMAGE, a CGE model of the Irish economy with particular focus on agriculture

Abstract

This thesis details the construction, calibration and interpretation of IMAGE, a CGE model of the hish economy. The name IMAGE is an acronym of “Irish Model of Agriculture, General Equilibrium”. This name captures the two key elements of the model, firstly that it is specifically designed to capture the key mechanisms that drive the Irish agricultural sector, and secondly that this is achieved in a general equilibrium framework. The structure of this thesis is as follows. Chapter 2 and Chapter 3 begin by documenting the construction of the base 1993 version of the model. The former discusses the form of the model code, the technology assumptions, i.e. functional forms, underlying the model and the method used for solving the model. Chapter 3 explains the data requirements for CGE models of the type employed, and explains the process used to reconcile the (at times conflicting) data from the various input- output sources. The chapter continues by explaining in some detail the methods used to extend the existing data set so as to arrive at a detailed breakdown by occupation type, by household type and by land type. A separate section is devoted to issues behind the allocation of subsidies to ensure an adequate modelling of the Common Agricultural Policy. Finally, the choice of model parameters is explained.