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Textbook of Computable General Equilibrium Modeling : Programming and Simulations - Nobuhiro Hosoe

Textbook of Computable General Equilibrium Modeling

Programming and Simulations

Hardcover

Published: 30th June 2010
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Computable General Equilibrium (CGE) models have been widely used for various economic simulations, such as, trade liberalization, environmental problems, and regulatory and tax reforms. CGE models are powerful but tend to be large-scale and, therefore, often difficult to learn.
This book provides a comprehensive A-to-Z guide for CGE models. Focusing on its practical application, readers can learn from the simplest CGE models, and proceed, in a step-by-step manner, to database construction, programming for computation, and developing more elaborated CGE models, which can be applied empirically to actual simulation purposes. Particular emphasis is placed on computer programs of CGE models. Readers can obtain knowledge and skills from which they can develop and operate their own CGE models, and apply them to their research.
This book is essential reading for all interested in computational economics, advanced macroeconomics, international trade, regional development, development economics.

Abbreviationsp. x
Symbols in CGE Modelsp. xii
Tables, Figures and Listsp. xv
Prefacep. xviii
Overviewp. 1
Economic analysis with computable general equilibrium modelsp. 1
Framework of CGE modelsp. 3
Advantages and shortcomings of CGE modelsp. 5
Applications of CGE modelsp. 6
Aims of this bookp. 6
Software and simulations on the PCp. 8
Structure of this textbookp. 10
The Simple CGE Modelp. 13
Setup of the economyp. 14
Household behaviourp. 15
Firm behaviourp. 16
Market-clearing conditionsp. 18
Model systemp. 19
Computationp. 23
Example: the 'household utility maximization model'p. 23
Formulation of the modelp. 24
Specifying coefficients and exogenous variablesp. 25
Computational proceduresp. 25
Preparing input filesp. 27
Structure of input files and general syntax of GAMSp. 27
Directivesp. 29
Results of computation in the output filep. 36
The Social Accounting Matrixp. 41
Structure of social accounting matrixp. 42
Social accounting matrix for the simple CGE modelp. 42
SAM for the standard CGE modelp. 44
Construction of social accounting matrixp. 47
Example: Social accounting matrix for Japanp. 50
Consistency among various databases and matrix adjustment for a SAMp. 56
Calibration and Computational Strategy for General Equilibriump. 61
The basic concept of calibrationp. 61
Value, price and quantityp. 63
Calibration procedure - mathematical manipulationp. 64
The case without indirect taxesp. 64
The case with indirect taxesp. 69
GAMS programmingp. 70
Programming procedures and an input filep. 70
Declaration and definition of setsp. 73
Installation of the SAMp. 74
Retrieval of data from the SAMp. 75
Calibrationp. 76
Specifying and solving the CGE modelp. 78
Initial values for numerical computationp. 78
Uses of lower boundsp. 79
Choice of numerairep. 80
Solution of the simple CGE modelp. 80
The Standard CGE Modelp. 87
Overview of the standard CGE modelp. 87
Intermediate inputsp. 89
Governmentp. 92
Investment and savingsp. 93
Introduction of investment and savingsp. 93
Modification of household and government behaviourp. 95
International tradep. 96
Small-country assumption and balance of paymentsp. 96
Armington's assumptionp. 97
Substitution between imports and domestic goodsp. 98
Transformation between exports and domestic goodsp. 99
Market-clearing conditionsp. 102
Model systemp. 103
GAMS programmingp. 106
Declaration of sets, installation of the SAM and derivation of the initial equilibrium valuesp. 112
Calibrationp. 114
Model solutionp. 118
Macro Closurep. 122
Investment and savings-macro closure in a closed economy modelp. 123
Current account balance-macro closure in an open economy modelp. 125
Other closure rulesp. 127
Simulating General Equilibriap. 128
Multiple runs in one input filep. 129
Computation of indicators from solved valuesp. 131
Measurement of economic welfarep. 133
Sensitivity analysisp. 137
The concept of sensitivity analysisp. 137
Example of sensitivity analysis with the standard CGE modelp. 138
Sensitivity analysis with a three-sector modelp. 139
Interpretation of Simulation Resultsp. 144
One-sector modelp. 145
A small open economyp. 145
Impact of import tariffsp. 149
Impact of transfers from abroadp. 151
Impact of terms of trade shockp. 152
Two-sector modelp. 153
Model Extensionp. 158
Multihousehold modelp. 158
Large-country modelp. 161
World trade modelp. 167
Two-country modelp. 167
Multicountry modelp. 174
Imperfect competition modelp. 176
Monopoly modelp. 176
Oligopoly modelp. 182
Quantitative restrictionsp. 182
Increasing-returns-to-scale modelp. 187
Concluding Remarksp. 191
Extensions inside the CGE modelsp. 191
Extensions outside the CGE modelsp. 192
Concluding remarks for better CGE modellingp. 193
Derivation of Household Demand Functionsp. 195
Competitive Equilibrium vs Social Optimump. 196
Utility Maximization and Lagrange Multipliersp. 199
Reformulation of a System of Simultaneous Equations into an Optimization Problemp. 200
Leontief-type Function and Optimizationp. 202
Advanced Uses of GAMSp. 204
Setp. 204
Sequence in a setp. 204
Alias of a setp. 204
Subsetp. 205
Setting values with formulap. 205
Large Table data inputp. 206
Output filep. 207
Printing variables and constantsp. 207
Suppressing outputp. 208
Communicating with spreadsheet softwarep. 208
Transfer of data in an input file into a spreadsheetp. 209
Transfer of data from a spreadsheet into a GDX filep. 211
How to Cope with Errors and Infeasibilitiesp. 213
Case 1: Compilation errorp. 213
Case 2: Execution error and Case 3: Solve errorp. 216
Case 4a: No base run equilibrium solutionp. 220
Case 4b: No counterfactual equilibrium solutionp. 221
Case 5: Incorrect solutionp. 222
Capacity limitation of GAMSp. 222
Web Resourcesp. 224
Referencesp. 226
Indexp. 229
GAMS Indexp. 234
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9780230248144
ISBN-10: 0230248144
Audience: Professional
Format: Hardcover
Language: English
Number Of Pages: 235
Published: 30th June 2010
Publisher: Palgrave Macmillan
Country of Publication: GB
Dimensions (cm): 22.23 x 12.7  x 1.91
Weight (kg): 0.41
Edition Number: 1