Modelling consumption and constructing long-term baselines in final demand

Modelling and projecting consumption, investment and government demand by commodities in CGE models poses many data and methodological . We review the state of knowledge of modelling consumption of (price and income elasticities and demographics), as well as the trends that we should be able to explain. We then discuss the current taken in CGE models to project the trends in demand at various levels commodity disaggregation. We examine the pros and cons of the various to adjust parameters over time or using functions of time and suggest a agenda to improve modelling and projection. We compare projections out 2050 using LES, CES and AIDADS functions in the same CGE model to the size of the differences. In addition, we briefly discuss the allocation of investment and government demand to individual commodities.