Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

While Computable General Equilibrium(CGE) models are now widely used in analysing energy issues in Korea, the econometric credibility is very weak in most practices using the models. An econometric approach to the model requires a lot of effort and cost in building database with the identification of the appropriate estimation methods. Thus in-depth analysis of foreign advanced CGE models would be useful. Via extended literature review, this study analyzes and describes the process how the values of parameters are determined in household demand sector of GTAP model, a representative global CGE model. The household demand sector is one of the most important sectors in CGE model having the most influence on model’s results. Although documents are available for the estimation process in GTAP model, most readers have difficulty in understanding the process, because various demand systems like CDE, LES and AIDADS are used in being mixed with both econometric estimation and calibration processes and there are many jumps and gaps in the documented processes. This study tries to fill the gaps in GTAP documents and to explain the process in a step-by-step manner. This study also proposes implications for the project of econometric estimation and database construction of the CGE model being recently tried in Korea.