Outline

Responses to global challenges such as international trade conflicts or climate change should be based on the systematic impact assessment of alternative policy options. The economic analysis of policies affecting markets in multiple countries requires both data and theory. We provide computational tools developed in the GAMS modeling language to extract the GTAP database of the global economy. We use empirical GTAP data for computable general equilibrium (CGE) analysis facilitated by MPSGE as a meta-language to implement CGE models in a compact non-algebraic manner. The workshop will demonstrate the practical usefulness of CGE analysis by means of policy-relevant applications to carbon tariffs in climate policy, disruptive trade policies, and supply chain shocks

The explicit algebraic formulation of general equilibrium conditions and the parameterization of functional forms to characterize technologies and preferences can become very tedious and error-prone, in particular for more complex production and consumption patterns. MPSGE (Mathematical Programming System for General Equilibrium) provides a short-hand non-algebraic representation for general equilibrium models releasing economists from the need to write down complicated equilibrium conditions explicitly as well as from the need to set up tedious calibration routines for the parameterization of demand and supply functions.

The workshop will show in detail how to transform algebraic CGE models into non-algebraic MPSGE syntax which can substantially lower the entry barriers and time cost of CGE analysis in both – algebraic and non-algebraic – cases, CGE models are stated as mixed complementarity problems (MCP) which link equilibrium conditions as nonlinear inequalities with complementary non-negative economic variables. The fundamental strength of CGE models implemented as MCP is the ability to handle corner solutions and regime shifts that might be central to the analysis of discrete production decisions (e.g. firm location) or the selection of international value chains (e.g. switching of trade links).

Target group

The workshop is targeted to economists at universities, research centers, consultancies, and ministries that are interested in the macroeconomic impact assessment of policy interventions using state-of-the art computable general equilibrium analysis. While CGE models are used in many policy fields for quantitative impact assessment, the workshop will primarily focus on CGE analysis of climate and trade policies.

Your benefit

The workshop provides you with state-of-the-art CGE modeling techniques. Application of these techniques will allow you to gain insights into economic theory with numbers and to undertake comprehensive economic impact assessment of policy reforms based on real data. Pedagogic analysis based on small-dimensional models with stylized data will be complemented with large-scale applications based on the GTAP data set. We will explain the structure of the GTAP data set and show how the data can be easily made amenable for applied policy analysis using multi-sector multi-region CGE models implemented in GAMS .

Requirements and preparation

Material and teaching is in English. Registered participants will receive teaching material prior to the start of the workshop such that they can prepare in advance. Teaching will combine lectures on theoretical underpinnings with numerical model applications largely based on peer-reviewed publications. Participants must be familiar with intermediate microeconomics at the master level.

In the run-up to the workshop, participants must take up the fundamentals of the programming language GAMS which is used in data management as well as for the numerical implementation of equilibrium models. GAMS (Generalized Algebraic Modeling System) is a high-level programming language for mathematical optimization. The GAMS notation builds on detached matrix algebra which allows for the transparent formulation of large-scale models and the efficient processing of extensive datasets. A compact do-it- yourself GAMS tutorial with simple illustrative optimization models will be sent out to registered participants in advance so they can easily acquaint themselves with the basic GAMS syntax. A temporary free GAMS license will be provided to the registered participants.

Participants are required to bring their own laptop with a USB port drive.