1. COMPUTABLE GENERAL EQUILIBRIUM MODELS (CGE): BASICS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty" October 21 st, 2013 UNIVERSIDAD AUTÓNOMA DE MADRID (UAM) Saúl de Vicente Queijeiro

2. COMPUTABLE GENERAL EQUILIBRIUM MODELS (CGE) NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty" IMPLEMENTATION OF A CGE MODELData Source: structure of a SAMBehavioral equationsMarket-clearing conditionsSOLVING THE MODELShock simulation

3. COMPUTABLE GENERAL EQUILIBRIUM MODELS (CGE) DATA SOURCE: SOCIAL ACCOUNTING MATRIX (SAM)THEORETICAL FRAMEWORK: SIMPLIFIED MODELSIMPLIFIED MODEL USING EXCELSIMPLIFIED MODEL USING GAMSTHEORETICAL FRAMEWORK: EXTENDED MODELEXTENDED MODEL USING GAMS: SIMULATION NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

4. IMPLEMENTATION OF A CGE MODEL: CGE framework NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

5. IMPLEMENTATION OF A CGE MODEL: CGE framework-SAM Structure (source: Breisinger et al, 2009) NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

6. IMPLEMENTATION OF A CGE MODEL: CGE framework-SAM Structure ActivitiesCommoditiesLaborCapitalHouseholdsGovernmentInvestmentRest of worldTotal Activities 24,996 Commodities12,029 12,1421,8054,6805,15135,807 Labor9,717 Capital3,250 Households 9,7173,2501,3872,00116,354 Government 2,372 940 7394,052 Savings 3,272860 5484,680 Rest of world 8,439 Total24,99635,8079,7173,25016,3544,0524,6808,439 NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

7. CGE THEORETICAL FRAMEWORK: SIMPLIFIED MODEL GOODS: BREAD AND WINE FACTORS: CAPITAL LABOUR INSTITUTIONS: HOUSEHOLDS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

8. CGE THEORETICAL FRAMEWORK: SIMPLIFIED MODEL BEHAVIORAL EQUATIONS HOUSEHOLDS S.T. NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

9. CGE THEORETICAL FRAMEWORK: SIMPLIFIED MODEL BEHAVIORAL EQUATIONS FIRMS Max NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

10. CGE THEORETICAL FRAMEWORK: SIMPLIFIED MODEL MARKET CLEARING CONDITIONS Market Equilibrium NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

11. CGE MODEL USING GAMS/EXCEL: STEPS DEFINITION OF TABLE NAME AND ITS SUFFICESLOADING DATA FROM SAM DECLARING AND FULLFILING PARAMETERS (EXOGENOUS AND INITIAL VALUES OF ENDOGENOUS) CALIBRATION: Declaring parameters (elasticities and technology state), obtained directly from the functional forms of the actors' behavior and the SAM. (EXOGENOUS) MODEL SYSTEM DECLARATION: DECLARING VARIABLES (ENDOGENOUS) DECLARING ECUATIONSCHOSING FUNCTIONAL FORMS OF BEHAVIOR EQUATIONS AND MARKET CLEARING CONDITIONS OBJECTIVE FUNCTION INITIALIZING VARIABLES AND SETTING LOWER BOUNDS SOLVING THE MODELSIMULATIONDISPLAYING RESULTS AND BENCHMARKING NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

12. EXTENDED MODEL: WHAT IS NEW? HOUSEHOLDS (DISPOSABLE RENT) FIRMS (INTERMEDIATE INPUTS) GOVERNMENT (TAXES) INVESTMENT (SAVING) INTERNATIONAL TRADE SMALL COUNTRY ASSUMPTION ARMINGTON ASSUMPTION MARKET CLEARING CONDITIONS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

13. EXTENDED MODEL: GENERAL STRUCTURE NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

14. CGE THEORETICAL FRAMEWORK: EXTENDED MODEL GOODS: BREAD AND WINE FACTORS: CAPITAL LABOUR INSTITUTIONS: HOUSEHOLDS, GOVERNMENT(WITH TARIFFS AND INDIRECT TAXES), INVESTMENT AND REST OF THE WORLD NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

15. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS HOUSEHOLDS New income constraint: NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

16. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS FIRMS: INTERMEDIATE INPUTS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

17. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS INTERMEDIATE INPUTS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

18. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS INTERMEDIATE INPUTS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

19. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS INTERMEDIATE INPUTS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

20. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS GOVERNMENT NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

21. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS INVESTMENT NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

22. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS INTERNATIONAL TRADE: SMALL COUNTRY ASSUMPTION NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

23. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS INTERNATIONAL TRADE: ARMINGTON ASSUMPTION NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

24. THEORETICAL FRAMEWORK: EXTENDED MODEL. BEHAVIORAL EQUATIONS INTERNATIONAL TRADE: ARMINGTON ASSUMPTION: NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

25. THEORETICAL FRAMEWORK: EXTENDED MODEL MARKET CLEARING CONDITIONS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

26. EXTENDED MODEL USING GAMS DEFINITION OF TABLE NAME AND ITS SUFFICES LOADING DATA FROM SAM: 5 COLUMUNS (+) IMPORTING DATA FROM A TXT. FILE DECLARING AND FULLFILING PARAMETERS (EXOGENOUS AND INITIAL VALUES OF ENDOGENOUS ) VALUE ADDED AND INTERMEDIATE INPUTS GOVERNMENT (TAXES) S-I REST OF THE WORLD COMPOSITE GOODS (ARMINGTON) NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

27. EXTENDED MODEL USING GAMS CALIBRATION: DECLARING AND CALCULATING PARAMETERS (EXOGENOUS) SUBSTITUTION ELASTICITIY PARAMETER TRANSFORMATION ELASTICITY PARAMETER SHARE PARAMETERS (LEONTIEF, CES, CET) AVERAGE PROPENSITY FOR SAVING TAX RATE NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

28. EXTENDED MODEL USING GAMS DEFINING MODEL SYSTEM VARIABLES (ENDOGENOUS) EQUATIONS HOUSEHOLD CONSUMPTION DOMESTIC PRODUCTION: VA, INTERMEDIATE DEMAND  COST FUNCTION GOVERNMENT INVESTMENT INTERNATIONAL TRADE: PRICES ARMINGTON AND TRANSFORMATION FUNCTIONS MARKET CLEARING CONDITIONS SAVINGS: (NUMBER OF VARIABLES=NUMBER OF EQUATIONS) OBJECTIVE FUNCTION INITIALIZING VARIABLES AND SETTING LOWER BOUNDS NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

29. EXTENDED MODEL USING GAMS SIMULATION DIFFERENCES BETWEEN INITIAL EQUILIBRIUM AND COUNTER- FACTUAL SOLUTION NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty"

30. THANK YOU NOPOOR Project "Enhancing Knowledge for Renewed Policies against Poverty" Saúl de Vicente Queijeiro October 21 st, 2013 UNIVERSIDAD AUTÓNOMA DE MADRID (UAM)