LINKAGE Technical Reference Document

This paper provides the complete specification of the LINKAGE Model. The latest version of the model is based on Version 6.0 of the GTAP dataset and has been used most recently to assess global free trade in the context of a future round of multilateral trade negotiations (see the World Bank's Global Economic Prospects 2002 and Global Economic Prospects 2004). The LINKAGE Model is a global dynamic computable general equilibrium model (CGE) with a 2001 base year. In its standard version, it is a neo-classical model with both factor and goods market clearing. It features three production archetypes—crops, livestock, and other—, a full range of tax instruments, price markups, multiple labor skills, vintage capital, and energy as an input combined with capital. Trade is modeled using nested Armington and production transformation structures to determine bilateral trade flows. Tariffs are fully bilateral and the model captures international trade and transportation costs—both direct and indirect (using iceberg trade costs). The latest version of the model also implements tariff rate quotas (TRQs). A recursive framework is used to drive dynamics, with savings-led investment and productivity. The model incorporates adjustment costs in capital markets and trade- responsive endogenous productivity. The core of the paper is divided into five sections—an introduction, a model overview, a detailed description of each block of the model, a discussion of model dynamics, and a description of the accounting framework underlying the model.