Lincoln Trade and Environment Model (LTEM) : an agricultural multi-country, multi-commodity partial equilibrium framework

Abstract

This research report introduces the Lincoln Trade and Environmental Model (LTEM). The report defines the model as well as comparing it to other trade modelling frameworks. The theoretical and technical specification of LTEM are detailed. The report then identifies the policies which can be incorporated into the LTEM. These policies are distinguished into unilateral policies and bilateral policies, and illustrate the capability of the model to simulate the impact of various complex policies on trade. The unilateral policies include the more traditional policies such as import tariffs and export subsidies, as well as market and input subsidies. However, the LTEM also includes the ability to model direct payments, production quotas and minimum prices. The bilateral policies in the LTEM include preferential access quotas with and without in-quota tariffs. In addition the LTEM can include more general trade access quotas, again with or without in- or out-quota tariffs, thus enabling the impact of more complex policies to be assessed. The research report then outlines the model interactions, and how the policy changes or other shocks to the LTEM are simulated.