Computable General Equilibrium Modeling of Agricultural Policies: Documentation of the 30-Sector FPGE GAMS Model of the United States

Abstract

This paper explains how U.S. agricultural policies are modeled in the 30-sector computable general equilibrium (CGE) model of the United States called the FPGE GAMS model (Earm Policy in General Equilibrium, General Algebraic Modeling System). The main features of the FPGE GAMS model are (1) farm programs are modeled explicitly rather than by using ad valorem equivalents; (2) every dollar spent and received under farm programs is accounted for; and (3) the facts that farm households earn nonfarm income and nonfarm households own farmland is made explicit. Policy modeling issues are discussed. There is a detailed explanation of the equations representing farm programs, spending, and program effects. Data sources and methods of calibration and parameterization are explained. A social accounting matrix (SAM) of the United States highlighting farm program expenditures and receipts is included.