Work Package 5

Dynamic Mercosur commodity models

Objectives

Estimate the necessary behavioural parameters (supply and demand elasticities) to construct the 10 Mercosur commodities models, and source the trade impact model, CAPRI
Develop impact variables and model for Mercosur ex-ante impact analysis
Perform free-trade scenarios impact analysis, on key Mercosur indicators

Description of work

• Define econometric methodology (estimator, system or single equation models, price expectation model…), in line with existing models and CAPRI. This will be based on an internal workshop with expert invitees.
• Set-up the necessary data base (spearheaded by the WP2 team): This implies an Info Gap Matrix, time series data needs, and additional collection in the countries.
• Perform estimation and document results. If so needed, some specific training is envisioned, with the econometrics team in Bonn (in the Mercosur region). In the region (and among our partners), there exists considerable expertise and experience with a wide variety of country and regional models. Several recently finished PhD partners from Chile, Uruguay and Argentina, with the help of our German colleagues, will combine their skills to generate the appropriate results.
• Perform sensitivity analysis with different levels of commodity system competitiveness, to generate ranges. Different (possible) levels of capital and technology investments in the agri-food sectors of the region will imply different levels and fields of competitiveness. Sensitivity analysis will generate these different implications (for both regions).
• Perform the impact analysis at the Mercosur level. The exact fields of impact need further validation. They include economic, social (equity), market and environmental (?) parameters.

Deliverables

D12 Defined suitable methodology for trade model estimation [8,O,RE]
D13 Time series Data base for Mercosur commodity models is ready [16,O,RE]
D14 Documents of results and data base with behavioural parameters & impact model [30,R,RE]

Milestones and expected results

M12 Methodologies for estimations and models defined [8]
M13 Data bases for estimations set-up [16]
M14 Estimation finalised, documented and parameters stored in data base [20]
M15 Mercosur impact analysis concluded [24]