Annex 4 analytical methods

model description

general description

acronym
MIRAGE
name
Modelling International Relationships in Applied General Equilibrium
main purpose
MIRAGE is a Computable General Equilibrium Model (CGE). In the European Commission it is used mainly for trade policy analysis, but it has also been used for analysing other policy areas such as agriculture and climate.
homepage
http://www.mirage-model.eu/miragewiki/index.php?title=Main_Page

Developer and its nature

ownership
Third-party ownership (commercial companies, Member States, other organisations, …)
ownership additional info
MIRAGE Consortium
is the model code open-source?
NO

Model structure and approach with any key assumptions, limitations and simplifications

details on model structure and approach

The model structure is described in detail in Decreux and Valin (2007) and in Bchir et al. (2002).

MIRAGE is similar in structure to most other CGE models, such as the GTAP model.

The key features by which MIRAGE differentiates itself from the dynamic GTAP model (Gdyn) are:

  • Recursive-dynamic formulation (optionally, the user can use a comparative-static version)
  • Imperfect Competition (optional)
  • Additional layer in Armington nesting to reflect quality differences between high-income and developing countries (optional, can be switched on for specific sectors)
  • Reduced labour mobility between rural and urban sectors (optional)
model inputs
  • GTAP database
  • CEPII estimates of non-tariff barriers in services
  • World Bank estimates of non-tariff barriers in goods
  • Macroeconomic projections by: IMF; World Bank; CEPII – based on various primary sources
model outputs

Macroeconomic variables:

  • GDP
  • Wages (by skill level)
  • Consumer Prices

Sector-specific variables (unless specifically mentioned, these can be added up to macro-level results):

  • Bilateral imports and exports
  • Total imports and exports
  • Output (cannot be added up)
  • Value-added
  • Factor demand (Labour and capital, cannot be added up)
  • CO2 emissions

Intended field of application

policy role

The model can be used for ex-ante analyses of policy changes to answer “what-if” type of research questions. It has also been used for ex-post analyses. The scenarios are formulated by changes to economic policy parameters, such as tariffs, non-tariff barriers, subsidies and taxes. These policy changes are usually sector specific or (less commonly) factor-specific as well as country or country-pair specific.

Although this is less commonly applied, the model can also be used for ex-post analyses. The research question would be formulated as follows: What would the situation in the last year (or the most recent year for which data is available) have been if the policy had not been implemented? And how does this compare to the actual observed situation?

These policy changes can apply to trade, including intra-EU trade, agricultural policy, climate, energy, transport and others.

policy areas
  • Agriculture and rural development 
  • Climate action 
  • Economy, finance and the euro 
  • Energy 
  • EU enlargement 
  • Transport 
  • Consumers 
  • Customs 
  • Single market 
  • Trade 

Model transparency and quality assurance

Are uncertainties accounted for in your simulations?
NO - CGE models routinely perform sensitivity analyses with respect to the value of key parameters or assumptions regarding the model structure. DG Trade for its in-house analyses has not engaged in quantifying these uncertainties. However, sensitivity analyses with respect to key parameters have been carried out e.g. Laborde, D., Padella, M., Edwards, R. and Marelli, L. (2014) (see references)
Has the model undergone sensitivity analysis?
YES - See response regarding uncertainties
Has the model been published in peer review articles?
YES - Analyses using the model have been published in peer-reviewed scientific journals.
Has the model formally undergone scientific review by a panel of international experts?
NO
Has model validation been done? Have model predictions been confronted with observed data (ex-post)?
NO - No validation has to our knowledge been published so far inside or outside of the European Commission.
To what extent do input data come from publicly available sources?
Entirely based on publicly available sources
Is the full model database as such available to external users?
YES - The GTAP database requires a subscription.
Have model results been presented in publicly available reports?
YES
Have output datasets been made publicly available?
NO - In-house analyses contributing to DG Trade evaluation studies have regularly been published as well as academic research.
Is there any user friendly interface presenting model results that is accessible to the public?
NO
Has the model been documented in a publicly available dedicated report or a manual?
YES - Please refer to the documents detailed in the summary

Intellectual property rights

Licence type
Non-Free Software licence

application to the impact assessment

Please note that in the annex 4 of the impact assessment report, the general description of the model (available in MIDAS) has to be complemented with the specific information on how the model has been applied in the impact assessment.

See Better Regulation Toolbox, tool #11 Format of the impact assessment report).