Forward-looking models assume perfect knowledge of the future; recursive dynamic models assume agents are myopic and operate as if current prices will continue into the future. FASOM is a forward-looking model and solves all years simultaneously, whereas FAPRI and POLYSYS are recursive dynamic models. GTAP can be run either as a comparative static or dynamic model. Comparative static models compute the market equilibrium under one set of conditions; when conditions change, the models compute the new equilibrium without worrying about the path from one equilibrium to the other. The comparative static solution does not have a particular time reference, although it is generally characterized as medium term or about eight years.1
The three PE models originally had a heavy focus on agricultural policy, although FASOM was designed to examine competition between forestry and agricultural sectors for land from its early stages. GTAP originally was developed to evaluate the effects of alternative trade policies in international trade negotiations and regional and bilateral trade agreements. Thus, GTAP is more heavily focused on the trade dimension. Specific details of each model follow.
FAPRI is a model of the U.S. agricultural sector, with extensions for the rest of world, designed originally for agricultural policy analysis. The model has been supported by congressional appropriations and is heavily used in providing information to congressional staffers on questions related to the Farm Bill. The FAPRI baseline—projections for the next decade—is used for policy and general outlook work by many others. In fact, the FAPRI baseline is used to help develop the POLYSYS baseline. The U.S. Department of Agriculture Economic Research Service uses the FAPRI baseline for some of their analysis. The model covers all the major U.S. agricultural crops and livestock sectors. It pays strong attention to detailed policy representation. It accounts for cropland use (as well as pasture for the United States and Brazil) and agricultural trade data (especially for the United States), but treats other macroeconomic effects as exogenous inputs to the model. International trade is included with the rest of world divided into regions. Trade adjustment is accounted for directly through supply and demand shifts with no consideration for traditional trade patterns. In other words, it adopts the Heckscher-Ohlin assumption that domestic and imported goods are identical. There are both deterministic and stochastic versions of FAPRI.
Before 1996, FASOM was an agricultural sector model, but it was modified in the mid-1990s to include the forestry sector. Since that time the model has been under continuous development. It presently includes detailed regional representation for cropland, pasture, and forestland for the United States. It is connected to the rest of the world by a relatively simple excess supply and demand structure. FASOM has often been used for environmental and greenhouse-gas (GHG) analyses; it was the primary model used by the U.S.
1 The biofuel modeling done by Purdue University to date has been done with the comparative static version of the model. However, others (for example, Massachusetts Institute of Technology, using the Emissions Prediction Policy Analysis model) have used the GTAP database as part of a recursive dynamic simulation model that runs for 100 years or more.