Trade - GCAM
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|Institution||Pacific Northwest National Laboratory, Joint Global Change Research Institute (PNNL, JGCRI), USA, http://www.globalchange.umd.edu.|
|Solution concept||General equilibrium (closed economy)GCAM solves all energy, water, and land markets simultaneously|
|Solution method||Recursive dynamic solution method|
|Anticipation||GCAM is a dynamic recursive model, meaning that decision-makers do not know the future when making a decision today. After it solves each period, the model then uses the resulting state of the world, including the consequences of decisions made in that period - such as resource depletion, capital stock retirements and installations, and changes to the landscape - and then moves to the next time step and performs the same exercise. For long-lived investments, decision-makers may account for future profit streams, but those estimates would be based on current prices. For some parts of the model, economic agents use prior experience to form expectations based on multi-period experiences.|
International trade in most commodities in GCAM is done by one of two methods: (1) Heckscher-Ohlin (single global markets), or (2) Armington Style Trade (global trade with regionally-differentiated markets with Armington-like preferences between domestic and imported commodities). Other approaches for trade can also be implemented in the GCAM framework (such as GCAM USA where logit based decisions are made to facilitate trade between the 50-states) See trade details and trade outputs for more details.