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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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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