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The FTAP2 Model: Theory and Data

Research memorandum

This memorandum by George Verikios and Zhang Xiao-guang was released in October 2001.

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Contents

Preliminaries
Cover, Copyright, Contents, Abbrevations and explanations

1   Introduction

2   Modifications to the theory of FTAP
2.1   Introducing perfect capital mobility between all firms owned by a region
2.2   Removing wealth accumulation and ‘turning off’ the bond market
2.3   Substitution of imported services with domestically-produced services
2.4   Miscellaneous changes to the FTAP equation system
2.5   Closing FTAP2

3   FDI stocks and rentals matrix
3.1   Introduction
3.2   Creating a 3D FDI stocks matrix using RAS procedures: an outline
3.3   Creating 3D FDI stocks and rentals matrices: detailed procedures
3.4   Collating the 23 sector FDI stock matrices and calculating FDI rentals

4   Incorporating impediments in the post-UR database using ALTERTAX
4.1   Adjusting regional bond income data in GTAPICM
4.2   Splitting out telecommunications and banking services in the post-UR database
4.3   Applying impediment rates using ALTERTAX

5   Splitting the post-UR, post-ALTERTAX database between domestic and foreign constituents
5.1   Splitting domestic and foreign capital impediments
5.2   Splitting domestic and foreign firms’ production
5.3   Splitting domestic and foreign firm’s exports and imports

References