Who Is Telling the Truth? Synthetic Uniformly Structured or Econometric Country Specific Models – A Model Comparison Based on the Luxembourg Agreement
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The paper discusses differences in the approaches of the different partial equilibrium models,
one of which is a synthetic model (GAPsi), and the other an econometrically estimated model
(AGMEMOD). For example, distinctions are to be found in the general approach of the outlay
of the models as the synthetic model incorporates only prices impacts and some shifts, while
the econometric model also includes other influencing factors. Price formation in GAPsi comprises
a system including policy measures such as price differentiations, whereas AGMEMOD’s
key price formation is based on an key-price equation, or respectively, the price
transmission. Here policy instruments are modelled directly as explaining variables. These differences
induce certain deviation in the model results for our example beef when the Luxembourg
Agreement is simulated.