A plea for greater attention on the data in policy analysis

The technical difficulties associated with building and solving applied gen eral equilibrium (GE) models seem to have distracted our attention from the data. Ln this article, we forcefully stress that whatever the sophisticati on of the GE analysis, it is only worth the quality of the supporting data it utilizes. We first highlight an example of a flagrant flaw in officially published input-output data (factor-income shares) by an LDC (Turkey), whi ch many researchers use without question. We then make use of an applied GE model to evaluate the dynamic gains for Turkey from currently debated trad e policy options and compare the predictions using conservatively adjusted, rather than official, data on factor shares. We show that the predicted we lfare gains are not only of a different order of magnitude, but in some cas es, of a different sign, hence, suggesting contradictory policy recommendat ions. (C) 1999 Society for Policy Modeling. Published by Elsevier Science I nc.