Sequential Calibration and Validation in SWAP

The SWAP model includes a sequential calibration routine and series of validation checks. The calibration phase of the SWAP model uses a sequential six-step process. The six steps are: 

  1. Assemble input, output and elasticity data
  2. Solve a linear program subject to fixed resource and calibration constraints
  3. Derive the CES production function parameters using input opportunity costs from step two
  4. Estimate the crop and region-specific PMP cost functions using a least squares method
  5. Calibrate the aggregate demand functions and regional adjustment costs using prior demand elasticity estimates, and
  6. Optimize and simulate the calibrated SWAP model which includes tests for adequate calibration in terms of input and output prices and quantities.