GAMS 2.50.094 DOS Extended/C

12/10/99 14:41:33 PAGE 1

CGE4

3

4

*INTRODUCTION ====================================================

In this file, the starting point is CGE3.

Additions: A government (and a new SAM), and labor unemployment with an

infinitely elastic supply of labor at a wage which is fixed in real

(and nominal) terms.

The line before any new feature or modification starts with

"*++".

16

17

*SETS ============================================================

18

19

SETS

20

21

AC global set (SAM accounts and other items)

22

/

AGR-A

agricultural activity

23

NAGR-A

non-agricultural activity

24

AGR-C

agricultural commodity

25

NAGR-C

non-agricultural commodity

26

LAB

labor

27

CAP

capital

28

U-HHD

urban household

29

R-HHD

rural household

30

*++

31

GOV

government

32

S-I

savings-investment

33

*++

34

YTAX

income tax

35

*++

36

STAX

sales tax

37

TOTAL

total account in SAM

/

38

39

ACNT(AC) all elements in AC except total

40

41

A(AC)

activities

42

/AGR-A, NAGR-A/

43

44

C(AC)

commodities

45

/AGR-C, NAGR-C/

46

47

F(AC)

factors

48

/LAB, CAP/

49

50

*++

51

I(AC)

institutions

52

/U-HHD, R-HHD, GOV/

53

54

H(AC)

households

55

/U-HHD, R-HHD/

56

;

57

58

ALIAS(AC,ACP); ALIAS(C,CP); ALIAS(F,FP); ALIAS(I,IP);

59

ACNT(AC) = YES; ACNT('TOTAL') = NO; ALIAS(ACNT,ACNTP);

60

61

62

*PARAMETERS======================================================

63

64

PARAMETERS

65

66

ad(A)

efficiency parameter in the production fn for a

67

alpha(F,A)

share of value-added to factor f in activity a

68

beta(C,H)

share of household consumption spending on commodity c

69

cpi

consumer price index

70

cwts(C)

weight of commodity c in the CPI

71

ica(C,A)

qnty of c as intermediate input per unit of activity a

72

*++

73

qg(C)

government demand for commodity c

74

qinvbar(C)

base-year qnty of investment demand for commodity c

75

shry(H,F)

share for household h in the income of factor f

76

theta(A,C)

yield of output c per unit of activity a

77

*++

78

tq(C)

rate of sales tax for commodity c

79

*++

80

tr(I,IP)

transfer from institution ip to institution i

81

*++

82

ty(H)

rate of income tax for household h

83

;

84

85

*VARIABLES=======================================================

86

87

VARIABLES

88

*++

89

EG

government expenditures

90

IADJ

investment adjustment factor

91

MPS(H)

marginal (and average) propensity to save for household h

92

P(C)

price of commodity c

93

PA(A)

price of activity a

94

PVA(A)

value-added (or net) price for activity a

95

*++

96

PX(C)

producer price for commodity c

97

Q(C)

output level for commodity c

98

QA(A)

level of activity a

99

QF(F,A)

quantity demanded of factor f from activity a

100

*++

101

QFS(F)

supply of factor f

102

QH(C,H)

quantity consumed of commodity c by household h

103

QINT(C,A)

qnty of commodity c as intermediate input to activity a

104

QINV(C)

quantity of investment demand for commodity c

105

WALRAS

dummy variable (zero at equilibrium)

106

WF(F)

price of factor f

107

*++

108

WFDIST(F,A)

wage distortion factor for factor f in activity a

109

110

YF(H,F)

income of household h from factor f

111

*++

112

YG

government revenue

113

YH(H)

income of household h

114

;

115

116

*EQUATIONS=======================================================

117

118

EQUATIONS

119

120

*PRODUCTION AND COMMODITY BLOCK++++++++

121

PRODFN(A)

Cobb-Douglas production function for activity a

122

FACDEM(F,A)

demand for factor f from activity a

123

INTDEM(C,A)

intermediate demand for commodity c from activity a

124

OUTPUTFN(C)

output of commodity c

125

*++

126

PDEF(C)

demander price for commodity c

127

PADEF(A)

price for activity a

128

PVADEF(A)

value-added price for activity a

129

130

*INSTITUTION BLOCK+++++++++++++++++++++

131

FACTTRNS(H,F)

transfer of income from factor f to h-hold h

132

HHDINC(H)

income of household h

133

HHDEM(C,H)

consumption demand for household h & commodity c

134

INVDEM(C)

investment demand for commodity c

135

*++

136

GOVREV

government revenue

137

*++

138

GOVEXP

government expenditures

139

140

*SYSTEM CONSTRAINT BLOCK+++++++++++++++

141

FACTEQ(F)

market equilibrium condition for factor f

142

COMEQ(C)

market equilibrium condition for commodity c

143

SAVINV

savings-investment balance

144

PNORM

price normalization

145

;

146

147

148

*PRODUCTION AND COMMODITY BLOCK++++++++

149

150

PRODFN(A)..

QA(A) =E= ad(A)*PROD(F, QF(F,A)**alpha(F,A));

151

152

FACDEM(F,A)..

WF(F)*WFDIST(F,A) =E= alpha(F,A)*PVA(A)*QA(A) / QF(F,A);

153

154

INTDEM(C,A)..

QINT(C,A) =E= ica(C,A)*QA(A);

155

156

OUTPUTFN(C)..

Q(C) =E= SUM(A, theta(A,C)*QA(A));

157

*++

158

PDEF(C)..

P(C) =E= (1 + tq(C))*PX(C);

159

*++

160

PADEF(A)..

PA(A) =E= SUM(C, theta(A,C)*PX(C));

161

162

PVADEF(A)..

PVA(A) =E= PA(A) - SUM(C, P(C)*ica(C,A));

163

164

165

*INSTITUTION BLOCK+++++++++++++++++++++

166

167

FACTTRNS(H,F)..

YF(H,F)

168

=E= shry(H,F)*SUM(A, WF(F)*wfdist(F,A)*QF(F,A));

169

*++

170

HHDINC(H)..

YH(H) =E= SUM(F, YF(H,F)) +tr(H,'GOV');

171

*++

172

HHDEM(C,H)..

QH(C,H) =E=

173

beta(C,H)*(1-MPS(H))*(1-ty(H))*YH(H)/P(C);

174

175

INVDEM(C)..

QINV(C) =E= qinvbar(C)*IADJ;

176

*++

177

GOVREV..

YG =E= SUM(H, ty(H)*YH(H)) + SUM(C, tq(C)*PX(C)*Q(C));

178

*++

179

GOVEXP..

EG =E= SUM(C, P(C)*qg(C)) + SUM(H, tr(H,'GOV'));

180

181

182

*SYSTEM CONSTRAINT BLOCK+++++++++++++++

183

*++

184

FACTEQ(F)..

SUM(A, QF(F,A)) =E= QFS(F);

185

*++

186

COMEQ(C)..

Q(C) =E= SUM(H, QH(C,H)) + SUM(A, QINT(C,A))

187

+ QINV(C) + qg(C);

188

*++

189

SAVINV..

SUM(C, P(C)*QINV(C)) + WALRAS =E=

190

SUM(H, MPS(H)*(1 - ty(H))*YH(H)) + (YG - EG);

191

192

PNORM..

SUM(C, cwts(C)*P(C)) =E= cpi;

193

194

195

*MODEL===========================================================

196

197

MODEL

198

199

CGE4 Model with gov't and flexible factor market treatment

200

/ALL/

201

;

202

203

*SOCIAL ACCOUNTING MATRIX========================================

204

205

TABLE SAM(AC,ACP) social accounting matrix

206

207

AGR-A

NAGR-A

AGR-C

NAGR-C

LAB

CAP

208

AGR-A

255

209

NAGR-A

350

210

AGR-C

66

44

211

NAGR-C

44

66

212

LAB

72

105

213

CAP

73

135

214

U-HHD

95

125

215

R-HHD

82

83

216

GOV

217

S-I

218

YTAX

219

STAX

25

33

220

221

222

+

U-HHD

R-HHD

GOV

S-I

YTAX

STAX

223

AGR-A

224

NAGR-A

225

AGR-C

55

77

11

27

226

NAGR-C

110

55

47

61

227

LAB

228

CAP

229

U-HHD

25

230

R-HHD

5

231

GOV

25

58

232

S-I

60

33

-5

233

YTAX

20

5

234

STAX

235

;

236

237

PARAMETER

238

tdiff(AC) column minus row total for account ac;

239

SAM('TOTAL',ACNTP)

= SUM(ACNT, SAM(ACNT,ACNTP));

240

SAM(ACNT,'TOTAL')

= SUM(ACNTP, SAM(ACNT,ACNTP));

241

tdiff(ACNT)

= SAM('TOTAL',ACNT) - SAM(ACNT,'TOTAL');

242

243

DISPLAY SAM, tdiff;

244

245

246

*ASSIGNMENTS FOR PARAMETERS AND VARIABLES========================

247

248

PARAMETERS

249

*The following parameters are used to define initial values of

250

*model variables.

251

EG0, IADJ0, MPS0(H), P0(C), PA0(A), PVA0(A), PX0(C), Q0(C), QA0(A),

252

QF0(F,A), QFS0(F), QH0(C,H), QINT0(C,A), QINV0(C), WF0(F),

253

WFDIST0(F,A), YF0(H,F), YG0, YH0(H)

254

;

255

256

257

*FACTOR EMPLOYMENT AND PRICES++++++++++

258

259

260

PARAMETERS

261

labor(A)

quantity of labor employed by activity (no. of workers)

262

/AGR-A 100, NAGR-A 50/

263

264

wfa(F,A)

wage for factor f in activity a (only for calibration)

265

costgap(F,A)

gap calibrated factor cost - SAM value (should be zero)

266

;

267

268

*Defining factor employment and supply

269

QF0('LAB',A)

= labor(A);

270

QF0('CAP',A)

= SAM('CAP',A);

271

*++

272

QFS0(F)

= SUM(A, QF0(F,A));

273

274

*Computing activity-specific wage

275

wfa(F,A)

= SAM(F,A)/QF0(F,A);

276

277

*Computing average wage

278

WF0(F)

= SUM(A, SAM(F,A))/SUM(A, QF0(F,A));

279

280

*Computing wage distortion factors

281

wfdist(F,A)

= wfa(F,A) / WF0(F);

282

283

*Checking calibration

284

costgap(F,A)

= WF0(F)*wfdist(F,A)*QF0(F,A) - SAM(F,A);

285

286

DISPLAY wfa, costgap;

287

288

289

*PRICE, PRODUCTION AND COMMODITY BLOCK++++++++

290

291

PA0(A)

= 1;

292

*++

293

PX0(C)

= 1;

294

PVA0(A)

= SUM(F, SAM(F,A)) / (SAM(A,'TOTAL')/PA0(A));

295

296

*++

297

tq(C)

= SAM('STAX',C)/SUM(A, SAM(A,C) );

298

*++

299

P0(C)

= PX0(C)*(1 + tq(C));

300

301

Q0(C)

= SAM('TOTAL',C)/P0(C);

302

QA0(A)

= SAM('TOTAL',A)/PA0(A);

303

QINT0(C,A)

= SAM(C,A)/P0(C);

304

305

alpha(F,A)

= SAM(F,A) / SUM(FP, SAM(FP,A));

306

ad(A)

= QA0(A) / PROD(F, QF0(F,A)**alpha(F,A));

307

ica(C,A)

= (SAM(C,A)/P0(C)) / QA0(A);

308

*++

309

theta(A,C)

= (SAM(A,C)/PX0(C)) / QA0(A);

310

311

312

*INSTITUTION BLOCK+++++++++++++++++++++

313

*++

314

EG0

= SAM('TOTAL','GOV') - SAM('S-I','GOV');

315

IADJ0

= 1;

316

*++

317

MPS0(H)

= SAM('S-I',H) / (SAM('TOTAL',H) - SAM('YTAX',H));

318

QH0(C,H)

= SAM(C,H)/P0(C);

319

QINV0(C)

= SAM(C,'S-I')/P0(C);

320

YF0(H,F)

= SAM(H,F);

321

*++

322

YG0

= SAM('GOV','TOTAL');

323

YH0(H)

= SAM('TOTAL',H);

324

325

beta(C,H)

= SAM(C,H)/SUM(CP, SAM(CP,H));

326

*++

327

qg(C)

= SAM(C,'GOV')/P0(C);

328

qinvbar(C)

= SAM(C,'S-I')/P0(C);

329

shry(H,F)

= SAM(H,F)/SAM('TOTAL',F);

330

*++

331

tr(H,'GOV')

= SAM(H,'GOV');

332

*++

333

ty(H)

= SAM('YTAX',H) / SAM('TOTAL',H);

334

335

336

*SYSTEM CONSTRAINT BLOCK+++++++++++++++

337

338

cwts(C)

= SUM(H, SAM(C,H)) / SUM((CP,H), SAM(CP,H));

339

cpi

= SUM(C, cwts(C)*P0(C));

340

341

342

*INITIALISATION OF VARIABLES+++++++++++

343

344

EG.L

= EG0;

345

IADJ.L

= IADJ0;

346

MPS.L(H)

= MPS0(H);

347

P.L(C)

= P0(C);

348

PA.L(A)

= PA0(A);

349

PVA.L(A)

= PVA0(A);

350

PX.L(C)

= PX0(C);

351

Q.L(C)

= Q0(C);

352

QA.L(A)

= QA0(A);

353

QF.L(F,A)

= QF0(F,A);

354

QFS.L(F)

= QFS0(F);

355

QH.L(C,H)

= QH0(C,H);

356

QINT.L(C,A)

= QINT0(C,A);

357

QINV.L(C)

= QINV0(C);

358

WF.L(F)

= WF0(F);

359

WFDIST.L(F,A)

= WFDIST0(F,A);

360

YF.L(H,F)

= YF0(H,F);

361

YG.L

= YG0;

362

YH.L(H)

= YH0(H);

363

364

365

*DISPLAY+++++++++++++++++++++++++++++++

366

367

DISPLAY

368

ad, alpha, beta, cpi, cwts, ica, shry, qg, qinvbar, theta, tr, ty

369

370

EG.L, IADJ.L, MPS.L, P.L, PA.L, PVA.L, PX.L, Q.L, QA.L, QF.L, QFS.L,

371

QH.L, QINT.L, QINV.L, WF.L, WFDIST.L, YF.L, YG.L, YH.L

372

;

373

374

375

*SELECTING CLOSURES++++++++++++++++++++

376

377

*SAVINGS-INVESTMENT BALANCE

378

379

SCALAR

380

SICLOS savings-investment closure /1/

381

*Select 1 or 2

382

*if SICLOS = 1, savings is investment-driven

383

*if SICLOS = 2, investment is savings-driven

384

385

IF(SICLOS EQ 1,

386

*Investment-driven savings -- MPS('U-HHD') is flexible, permitting

387

*the savings value to adjust.

388

IADJ.FX

= IADJ0;

389

MPS.FX('R-HHD')

= MPS0('R-HHD');

390

MPS.LO('U-HHD')

= -INF;

391

MPS.UP('U-HHD')

= +INF;

392

MPS.L('U-HHD')

= MPS0('U-HHD');

393

);

394

395

IF(SICLOS EQ 2,

396

*Savings-driven investment -- IADJ is flexible, permitting

397

*investment quantities and the investment value to adjust.

398

MPS.FX(H)

= MPS0(H);

399

IADJ.LO

= -INF;

400

IADJ.UP

= +INF;

401

IADJ.L

= IADJ0;

402

);

403

404

405

*FACTOR MARKETS

406

*For each factor, fix (A + 1) quantity and-or price variables

407

408

SCALARS

409

CAPCLOS closure for capital market /2/

410

*Select 1 or 2

411

*if CAPCLOS = 1, capital is mobile and fully employed

412

*if CAPCLOS = 2, capital is activity-specific and fully employed

413

414

LABCLOS closure for labor market /2/

415

*Select 1 or 2

416

*if LABCLOS = 1, labor is mobile and fully employed

417

*if LABCLOS = 2, labor is mobile and unemployed (fixed wages)

418

419

420

IF(CAPCLOS EQ 1,

421

*Capital is fully employed and mobile. WF('CAP') is the market-clearing

422

*variable for the unified capital market.

423

424

WFDIST.FX('CAP',A)

= WFDIST0('CAP',A);

425

426

WF.LO('CAP')

= -INF;

427

WF.UP('CAP')

= +INF;

428

WF.L('CAP')

= WF0('CAP');

429

430

QF.LO('CAP',A)

= -INF;

431

QF.UP('CAP',A)

= +INF;

432

QF.L('CAP',A)

= QF0('CAP',A);

433

434

QFS.FX('CAP')

= QFS0('CAP');

435

);

436

437

IF(CAPCLOS EQ 2,

438

*Capital is fully employed and activity-specific.

439

*WFDIST('CAP',A) is the market-clearing variable, one for

440

*each segment of the capital market.

441

442

WFDIST.LO('CAP',A)

= -INF;

443

WFDIST.UP('CAP',A)

= +INF;

444

WFDIST.L('CAP',A)

= WFDIST0('CAP',A);

445

446

WF.FX('CAP')

= WF0('CAP');

447

448

QF.FX('CAP',A)

= QF0('CAP',A);

449

450

QFS.LO('CAP')

= -INF;

451

QFS.UP('CAP')

= +INF;

452

QFS.L('CAP')

= QFS0('CAP');

453

);

454

455

IF(LABCLOS EQ 1,

456

*Labor is fully employed and mobile. WF('LAB') is the market-clearing

457

*variable for the unified capital market.

458

459

WFDIST.FX('LAB',A)

= WFDIST0('LAB',A);

460

461

WF.LO('LAB')

= -INF;

462

WF.UP('LAB')

= +INF;

463

WF.L('LAB')

= WF0('LAB');

464

465

QF.LO('LAB',A)

= -INF;

466

QF.UP('LAB',A)

= +INF;

467

QF.L('LAB',A)

= QF0('LAB',A);

468

469

QFS.FX('LAB')

= QFS0('LAB');

470

);

471

472

IF(LABCLOS EQ 2,

473

*Labor is unemployed and mobile. For each activity, the wage,

474

*WFDIST('LAB',A)*WF('LAB'), is fixed. QFS('LAB') is the market-clearing

475

*variable for the unified labor market.

476

477

WFDIST.FX('LAB',A)

= WFDIST0('LAB',A);

478

479

WF.FX('LAB')

= WF0('LAB');

480

481

QF.LO('LAB',A)

= -INF;

482

QF.UP('LAB',A)

= +INF;

483

QF.L('LAB',A)

= QF0('LAB',A);

484

485

QFS.LO('LAB')

= -INF;

486

QFS.UP('LAB')

= +INF;

487

QFS.L('LAB')

= QFS0('LAB');

488

);

489

490

DISPLAY SICLOS, CAPCLOS, LABCLOS;

491

492

493

*SOLVE STATEMENT FOR BASE========================================

494

495

CGE4.HOLDFIXED = 1;

496

497

*SOLVE CGE4 USING MCP;

498

499

500

*REPORT SETUP AND BASE REPORT====================================

501

502

*SET AND PARAMETERS FOR REPORTS++++++++

503

504

*++

505

SET

506

SIM

simulations

507

/

BASE

base simulation

508

QGINCR

increase in government consumption /

509

;

510

511

PARAMETERS

512

*++

513

QGSIM(C,SIM)

government consumption of c for sim

514

*++

515

QGREP(C,SIM)

government consumption of c for sim (check)

516

517

EGREP(SIM)

government expenditures

518

IADJREP(SIM)

investment adjustment factor

519

MPSREP(H,SIM)

marginal (and avg) propensity to save for household h

520

PREP(C,SIM)

demander price for commodity c

521

PAREP(A,SIM)

price of activity a

522

PVAREP(A,SIM)

value-added price for activity a

523

PXREP(C,SIM)

producer price (excl. sales tax) for commodity c

524

QREP(C,SIM)

output level for commodity c

525

QAREP(A,SIM)

level of activity a

526

QFREP(F,A,SIM)

demand for factor f from activity a

527

QFSREP(F,SIM)

supply of factor f for sim

528

QHREP(C,H,SIM)

consumption of commodity c by household h

529

QINTREP(C,A,SIM)

qnty of commodity c as intermed. input for activity a

530

QINVREP(C,SIM)

quantity of investment by commodity of origin c

531

WFREP(F,SIM)

average price of factor f

532

WFAREP(F,A,SIM)

price of factor f for activity a

533

WFDISTREP(F,A,SIM)

wage distortion factof for factor f in activity a

534

YFREP(H,F,SIM)

income of household h from factor f

535

YGREP(SIM)

government revenue

536

YHREP(H,SIM)

income of household h

537

WALRASREP(SIM)

dummy variable (zero at equilibrium)

538

;

539

540

*++

541

QGSIM(C,'BASE')

= qg(C);

542

QGSIM(C,'QGINCR')

= 1.2*qg(C);

543

544

DISPLAY QGSIM;

545

546

547

LOOP(SIM,

548

*++

549

qg(C) = QGSIM(C,SIM);

550

551

SOLVE CGE4 USING MCP;

552

553

*++

554

QGREP(C,SIM)

= qg(c);

555

556

EGREP(SIM)

= EG.L;

557

IADJREP(SIM)

= IADJ.L;

558

MPSREP(H,SIM)

= MPS.L(H);

559

PREP(C,SIM)

= P.L(C);

560

PAREP(A,SIM)

= PA.L(A);

561

PVAREP(A,SIM)

= PVA.L(A);

562

PXREP(C,SIM)

= PX.L(C);

563

QREP(C,SIM)

= Q.L(C);

564

QAREP(A,SIM)

= QA.L(A);

565

QFREP(F,A,SIM)

= QF.L(F,A);

566

QFSREP(F,SIM)

= QFS.L(F);

567

QHREP(C,H,SIM)

= QH.L(C,H);

568

QINTREP(C,A,SIM)

= QINT.L(C,A);

569

QINVREP(C,SIM)

= QINV.L(C);

570

WFREP(F,SIM)

= WF.L(F);

571

WFAREP(F,A,SIM)

= WF.L(F)*WFDIST.L(F,A);

572

WFDISTREP(F,A,SIM)

= WFDIST.L(F,A);

573

YFREP(H,F,SIM)

= YF.L(H,F);

574

YGREP(SIM)

= YG.L;

575

YHREP(H,SIM)

= YH.L(H);

576

WALRASREP(SIM)

= WALRAS.L;

577

);

578

579

OPTION

QFREP:3:1:1, QHREP:3:1:1, QINTREP:3:1:1, WFAREP:3:1:1,

580

WFAREP:3:1:1, WFDISTREP:3:1:1, YFREP:3:1:1

581

;

582

583

DISPLAY

584

QGREP, EGREP, IADJREP, MPSREP, PREP, PAREP, PVAREP, PXREP, QREP,

585

QAREP, QFREP, QFSREP, QHREP, QINTREP, QINVREP, WFREP, WFAREP,

586

WFDISTREP, YFREP, YGREP, YHREP, WALRASREP

587

;