MIRAGE-e structure overview
In a nutshell, MIRAGE-e is a multi-sector, multi-country CGE model that is particularly fitted to assess jointly trade policy and climate change mitigation policies
- A representative agent, which gathers both consumers and the government, maximizes an LES-CES utility function.
- The consumer emits greenhouse gases from its consumption of fossil energy goods
- Firms in each sector maximize their profit function under the production function described in the supply side page:
- Can be one representative firm under perfect competition or \(N\) identical firms under oligopolistic competition à la Krugman
- CO\(_2\) emissions are computed with sector-specific emission factors.
- Non-tariff measures can be introduced and modeled as an iceberg cost or a rent-creating trade cost (allocated to exporter or importer)
Along with these core assumptions, and under some aggregation constraints, the model can better represent the use and production of energy:
- The representative firm mainly substitutes energy with value-added components.
- Every firm’s energy consumption is subject to time-varying energy productivity.
- Energy-producing firms have a slightly different production function
Data
MIRAGE-e mainly relies on GTAP data but also depends on several sources.
GTAP data
MIRAGE relies for SAMs on the GTAP database. The model cannot run with GTAP fully disaggregated on a personal computer due to computation resource requirements and requires aggregation in a number of around 25 regions and 25 sectors.
GTAP also represents a strong network for research on global trade modeling. The GTAP official website constitutes an important source of information for CGE modelers.
Protection data
Data on protection are particularly sensitive for trade policy assessment. For simulations done with MIRAGE, we do not use GTAP aggregated tariff but compute our own tariff equivalents thanks to the database MAcMap-HS6 developed at CEPII, and that represents bilateral applied tariffs for 5,113 products in the HS6 nomenclature. The tariff aggregation is done through the use of reference groups.
Non-tariff measures
MIRAGE-e is able to take non-tariff measures into account. It relies on the following data:
- Trade frictions are measured as the ad-valorem equivalent of the time spent in customs, provided by ImpactEcon.
- Ad-valorem equivalents for NTMs in services are built at CEPII (Fontagné, Mitaritonna, and Signoret 2016).
- Ad-valorem equivalents for NTMs in goods are taken from Kee, Nicita, and Olarreaga (2008).
Baseline
MIRAGE-e baseline is built using the EconMap database. It is used to calibrate the baseline trajectory of:
- Total factor productivity
- Population by education level
- Savings rate and current account
- Energy efficiency