Future developments of the MPI TERM CGE model – a review of the literature June 2023

This review explores the literature on economic models and their application, in relation to the potential avenues for the development and expansion of the Ministry for Primary Industries’ TERM CGE model. As such, the review will focus primarily on CGE modelling and the potential linkages or expansions available for consideration. The TERM CGE model was developed in Australia, where it is primarily used, although other variations of the model exist for other nations (including New Zealand). This literature review will therefore also address some of the existing variants and modifications on the TERM model as potential avenues for the MPI-based model. The GTAP (Global Trade Analysis Project) model (and its variants) is one of the most well-known, well established, and well documented CGE models. While not all of the body of literature on the GTAP model is necessarily applicable to the TERM model, many of the underlying equation structures, features and limitations are common to CGE models, thus this body of literature will also be drawn upon.