A change in endogenous variables in general equilibrium

Problems with modeling
veronna
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A change in endogenous variables in general equilibrium

Postby veronna » 3 days ago

Hi,

Primarily, developing a CGE model is intended to examine the policy change using the changes in coefficients and exogenous variables.
Regarding to this matter, when I intended to examine a change in any endogenous variable (for example, a change in domestic good price),
I find myself lost in proceeding with the analysis.
Thus, may I know what can I do if I want to get to know the change impacts in endogenous variables?
Or, it could be done by creating a new parameter (to represent the related endogenous variable intended to change) before the solution?

Thank you very much in advance.

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Renger
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Re: A change in endogenous variables in general equilibrium

Postby Renger » 3 days ago

Hi
You are on the right track. First, run the benchmark that replicates your data (usually, all prices are equal to 1). This is also a good test to see if you have errors in the model). Then do a counterfactual and compare the results.
parameter results(*,i) Results for the sectors
* PD0 is the benchmark price
results("Price change PD",i) = 100 * (PD.L(i) / PD0(i) - 1);
etc.

veronna
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Re: A change in endogenous variables in general equilibrium

Postby veronna » 12 hours ago

Thanks Renger once again!

So, if I try to solve a simulation in a LOOP (as following), the endogenous variable should be fixed with the new parameter (for simulation) in order to make it as an exogenous variable.
Am I doing right?

LOOP(SIM,

PD.FX('AGR') = PAGRINCR(SIM);
SOLVE "name of model" USING MCP;

.
.
QARAP(A,SIM) = QA.L(A);
QDRAP(C,SIM) = QD.L(C);
QERAP(C,SIM) = QE.L(C);
QMRAP(C,SIM) = QM.L(C);
.
.
);

Thank you very much in advance.


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