TRAINING SESSION ON CGE MODELING

FFC-PEP SCHOOL TRAINING ON POVERTY AND ECONOMIC POLICY ANALYSIS TRAINING SESSION ON CGE MODELING THREE BASIC CGE MODELS Hélène Maisonnave and Véroni...
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FFC-PEP SCHOOL TRAINING ON POVERTY AND ECONOMIC POLICY ANALYSIS

TRAINING SESSION ON CGE MODELING THREE BASIC CGE MODELS

Hélène Maisonnave and Véronique Robichaud FFC-PEP WORKSHOP – MIDRAND, SOUTH AFRICA AUGUST 2010

Table of contents Table of contents Model AUTA: A Closed Economy without Government Model AUTETA: A Closed Economy with Government Model EXTER: A Open Economy with Government Model EXTER 2: Non -Infinite Foreign Demand for Exports

1 5 13 23 35

Acknowledgement The training material was prepared by Hélène Maisonnave and Véronique Robichaud. In this document we present basic CGE models from Decaluwé, B., A. Martens and L. Savard (2001), « La politique économique du développement et les modèles d'équilibre général calculable. Une introduction », Montréal, Presses de l'Université de Montréal, 524 p. This material can be used freely by participants as long as correct reference is made to the source of the models.

Model AUTA: A Closed Economy without Government Social accounting matrix Equations and variables Simulation results

6

FFC-PEP Workshop, August 2010 ES,HW SHHW YHHW

8. Services

9. Accumulation

TOTAL (1 to 9) RK

EI,HW

7. Industry

WL

EA,HW

RKF

5. Firms

6. Agriculture

RKHC

4. Capital endowed households

3. Labour endowed households WL

YHHC

SHHC

ES,HC

EI,HC

EA,HC

4.

YF

SF

DIV

5.

6.

VXA

CIS,A

CII,A

CIA,A

RKA

3.

VXI

CIS,I

CII,I

CIA,I

RKI

WLI

7.

8.

VXS

CIS,S

CII,S

CIA,S

RKS

WLS

PRODUCTIVE ACTIVITIES

2. Capital

2.

AGENTS

WLA

1.

FACTORS

1. Labour

Expenses 

Receipts 

MODEL AUTA: A CLOSED ECONOMY WITHOUT GOVERNMENT SOCIAL ACCOUNTING MATRIX

IT

IVI

IVA

9.

ACC.

ST

VXS

VXI

VXA

YF

YHHC

YHHW

RK

WL

(1 to 9)

TOTAL

Legend i, j  A, I , S h  HW , HC

Industries and commodities (A: agriculture, I: industry, S: services) Households (HW: labour endowed households, HC: capital endowed households)

CI i , j

Intermediate consumption of commodity i in industry j Dividends Expenditure in commodity i of type h household Total investment

DIV

Ei ,h IT

IVi RK F RK HC RK j

RK SF

Investment in commodity i Capital revenue paid to firms Capital revenue paid to capitalists Return to capital from industry j Total capital revenue Firms' savings

YF

Savings of type h household Total savings Output of industry j Wage bill paid by industry j Total wage bill paid to workers Firms' income

YH h

Income of type h household

SH h ST VX

j

WL j WL

AUTA

7

8

FFC-PEP Workshop, August 2010 10,101 2,886 28,860

8. Services

9. Accumulation

TOTAL (1 to 9) 18,500

11,544

7. Industry

28,860

4,329

7,400

5. Firms

6. Agriculture

11,100

4. Capital endowed households

3. Labour endowed households 28,860

13,000

2,600

5,850

3,900

650

4.

7,400

5,500

1,900

5.

6.

9,000

136

1,544

120

1,440

3.

54,400

11,264

21,709.1

2,526.9

11,340

7,560

7.

8.

30,700

3,349

5,815.5

275.5

5,720

15,540

PRODUCTIVE ACTIVITIES

2. Capital

2.

AGENTS

5,760

1.

FACTORS

1. Labour

Expenses 

Receipts 

10,986

9,887.4

1,098.6

9.

ACC.

MODEL AUTA: A CLOSED ECONOMY WITHOUT GOVERNMENT NUMERICAL SAM

10,986

30,700

54,400

9,000

7,400

13,000

28,860

18,500

28,860

(1 to 9)

TOTAL

AUTA: Equations and variables

A. E Q U A TI O N S (50) Production 1. VA j  v j  XS j

3

2. CI j  io j  XS j

3



1 j

3. VA j  A j  LD j j  KD j  j  PVA j  VA j

4. LD j 

5. DI i , j  aiji , j

W  CI j

3 3 9

Income and savings 6. YH hw  W   LD j

1

j

7. YH hc     R j  KD j  DIV

1

j

8. SH h   h  YH h 9. YF  1      R j  KD j

2 1

j

10. SF  YF  DIV

1

Demand 11. Ci ,h 

 i ,h YH h

6

Pi  IT 12. INVi  i Pi

3

13. DITi   DI i , j

3

j

Prices 14. PVA j  15. R j 

Pj XS j   Pi DI i , j i

VA j

PVA j  VA j  W  LD j KD j

3 3

Equilibrium 16. XSi  DITi   Ci ,h  INVi 17. LS   LD j

3

h

1

j

18. IT   SH h  SF

1

h

AUTA

9

B. E N DO G E N O U S

(50)

Consumption of commodity i by type h households (volume) Total intermediate consumption of industry j (volume) Intermediate consumption of commodity i in industry j (volume) Total intermediate demand for commodity i (volume) Final demand of commodity i for investment purposes (volume) Total investment Industry j demand for labour (volume) Price of commodity i Value added price for industry j Rate of return to capital from industry j Firms' savings Savings of type h household Value added of industry j (volume) Wage rate Output of industry j (volume) Firms' income Income of type h household

Ci ,h : CI j : DI i , j :

DITi : INVi : IT :

LD j :

Pi : PVA j :

Rj : SF :

SH h : VA j : W : XS j :

YF :

YH h :

C. E XO G E N O U S

V AR I AB L E S

V AR I A B L E S

DIV : KD j :

LS :

6 3 9 3 3 1 3 3 3 3 1 2 3 1 3 1 2

(5)

Dividends Industry j demand for capital (volume) Total labour supply (volume)

1 3 1

D. P A RA M ET E R S Aj : aiji , j :

j :

 i ,h : io j :

 :

i : h : vj :

Scale coefficient (Cobb-Douglas production function) Input-output coefficient Elasticity (Cobb-Douglas production function) Share of the value of commodity i in total income of household h Technical coefficient (Leontief production function) Share of capital income received by capitalists Share of the value of commodity i in total investment Propensity to save Technical coefficient (Leontief production function)

E. S E TS i, j  I  AGR, IND, SER Industries and commodities (AGR: agriculture, IND: industry,

h  H  HW , HC

10

SER: services) Households (HW: labour endowed households, HC: capital endowed households) FFC-PEP Workshop, August 2010

AUTA: Simulation results DEFINITIONS

SYMBOL

BENCHMARK

S I M U L A T I O N 1: LS +10%

S I M U L A T I O N 2: KDSER +10%

P R IC E S • wage rate

W

1

Ragr

1

• industry

Rind

1

• services

Rser

1

• agriculture

PVAagr

1

• industry

PVAind

1

• services

PVAser

1

Pagr

1

• industry

Pind

• services

Pser

0.976

1.000

(2.40)

(0.02)

1.063

1.005

RATE OF RETURN TO CAPITAL • agriculture

(6.29)

(0.47)

1.109

1.018

(10.94)

(1.83)

1.060

0.899

(6.02)

(10.10)

0.993

1.001

1.054

1.011

VALUE ADDED PRICE (0.72)

(0.07)

(5.40)

(1.08)

0.998

0.972

(0.20)

(2.84)

1.000

1.000

PRODUCER PRICE • agriculture (numeraire)

(0.00)

(0.00)

1

1.033

0.999

1

1.005

(3.31)

(0.15)

0.978

(0.55)

(2.24)

9,635.73

9,035.25

P R O D UC TI ON AN D F A CTO R S OUTPUT • agriculture

XSagr

9,000

• industry

XSind

• services

(7.06)

(0.39)

54,400

57,259.80

54,801.01

(5.26)

(0.74)

XSser

30,700

32,613.22

31,247.71

(6.23)

(1.78)

VAagr

7,200

7,708.58

7,228.20

• industry

VAind

• services

VALUE ADDED • agriculture

(7.06)

(0.39)

18,900

19,893.57

19,039.32

(5.26)

(0.74)

VAser

21,260

22,584.92

21,639.30

(6.23)

(1.78)

LDagr

5,760

6,273.00

5,788.21

• industry

LDind

• services

LABOUR • agriculture

• total

(8.91)

(0.49)

7,560

8,593.09

7,700.09

(13.67)

(1.85)

LDser

15,540

16,879.92

15,371.70

LS

28,860

31,746.00

28,860.00

(10.00)

(0.00)

(8.62)

(1.08)

CAPITAL • agriculture

KDagr

1,440

• industry

KDind

• services

1,440.00

1,440.00

(0.00)

(0.00)

11,340

11,340.00

11,340.00

(0.00)

(0.00)

KDser

5,720

5,720.00

6,292.00

(0.00)

(10.00)

CIagr

1,800

1,927.15

1,807.05

• industry

CIind

• services

CIser

TOTAL INTERMEDIATE CONSUMPTION • agriculture

AUTA

(7.06)

(0.39)

35,500

37,366.23

35,761.69

(5.26)

(0.74)

9,440

10,028.30

9,608.42

(6.23)

(1.78)

11

DEFINITIONS

SYMBOL

BENCHMARK

S I M U L A T I O N 1: LS +10%

S I M U L A T I O N 2: KDSER +10%

INTERMEDIATE CONSUMPT ION • agriculture

• industry

• services

DIagr,agr

120

DIind,agr

128.48

120.47

(7.06)

(0.39)

1,544

1,653.06

1,550.05

(7.06)

(0.39)

DIser,agr

136

145.61

136.53

(7.06)

(0.39)

DIagr,ind

2,526.9

2,659.74

2,545.53

(5.26)

(0.74)

DIind,ind

21,709.1

22,850.35

21,869.13

(5.26)

(0.74)

DIser,ind

11,264

11,856.15

11,347.03

(5.26)

(0.74)

DIagr,ser

275.5

292.67

280.42

(6.23)

(1.78)

DIind,ser

5,815.5

6,177.92

5,919.25

(6.23)

(1.78)

DIser,ser

3,349

3,557.71

3,408.75

(6.23)

(1.78)

30,984.28

28,852.98

IN C O M E AN D S AV IN G S INCOME • labour endowed households • capital endowed households • firms

YHhw

28,860

YHhc

13,000

14,005.06 (7.73)

(0.70)

YF

7,400

8,070.04

7,460.28

(9.06)

(0.82)

SHhw

2,886

3,098.43

2,885.30

SHhc

2,600

2,801.01 (7.73)

(0.70)

SF

5,500

6,170.04

5,560.28

(12.18)

(1.10)

4,647.64

4,327.95

(7.36)

(0.02)

13,090.42

SAVINGS • labour endowed households • capital endowed households • firms

(7.36)

(0.02)

2,616.09

D E M AN D LABOUR ENDOWED HOUSEHOLDS – CONSUMPTION • agriculture

Cagr,hw

4,329

• industry

Cind,hw

11,544

11,996.83 (3.92)

(0.12)

• services

Cser,hw

10,101

10,785.67

10,329.81

(6.78)

(2.27)

700.25

654.52

(7.36)

(0.02)

11,557.97

CAPITAL ENDOWED HOUSE HOLDS – CONSUMPTION • agriculture

Cagr,hc

650

• industry

Cind,hc

• services

(7.73)

(0.70)

3,900

4,066.97

3,932.84

(4.28)

(0.84)

Cser,hc

5,850

6,268.09

6,025.59

(7.15)

(3.00)

DITagr

2,922.4

3,080.88

2,946.41

• industrial products

DITind

• services

INTERMEDIATE DEMAND • agricultural products

(5.42)

(0.82)

29,068.6

30,681.33

29,338.43

(5.55)

(0.93)

DITser

14,749

15,559.46

14,892.31

(5.50)

(0.97)

INVagr

1,098

1,206.95

1,106.37

INVind IT

INVESTMENT DEMAND • agricultural products • industrial products • total

12

(9.86)

(0.71)

9,887.4

10,514.68

9,971.78

(6.34)

(0.85)

10,986

12,069.48

11,063.67

(9.86)

(0.71)

FFC-PEP Workshop, August 2010

Model AUTETA: A Closed Economy with Government Social accounting matrix Equations and variables Simulation results

14

FFC-PEP Workshop, August 2010 YHHC

YF

YG

YHHW

TOTAL (1 to 15)

SF

SG

SHHC

SHHW

15. Accumulation

ES,HC G

ES,HW

13. Services

EI,HC

EA,HC

TG

6.

14. Non-tradables

EI,HW

12. Industry

RK

DIV

5.

DTHHW DTHHc DTF

EA,HW

WL

RKF

RKHC

11. Agriculture

10. Non-tradables

9. Services

8. Industry

7. Agriculture

6. Government

5. Firms

3. Labour endowed households 4. Capital endowed households WL

4.

7.

VXA

CIS,A

CII,A

CIA,A

RKA

3.

2. Capital

2.

AGENTS

WLA

1.

FACTORS

1. Labour

Expenses

Receipts 

VXI

CIS,I

CII,I

CIA,I

RKI

WLI

8.

VXS

CIS,S

CII,S

CIA,S

RKS

WLS

9.

INDUSTRIES

VXN

CIS,N

CII,N

CIA,N

WLN

10.

VXTA

VXA

TIA

11.

VXTI

VXI

TII

12.

VXTS

VXS

TIS

13.

COMMODITIES

MODEL AUTETA: A CLOSED ECONOMY WITH GOVERNMENT SOCIAL ACCOUNTING MATRIX

VXTN

VXN

14.

IT

IVI

IVA

15.

ACC.

ST

VXTN

VXTS

VXTI

VXTA

VXN

VXS

VXI

VXA

YG

YF

YHHC

YHHW

RK

WL

(1 to 15)

TOTAL

Legend i, j  A, I , S , N  h  HW , HC

CI i , j

DIV

DTF

DTH h Ei ,h G IT

IVi RK F RK HC RK j RK

SF

SH h SG

ST

TG

TI i VX

j

Industries and commodities (A: agriculture, I: industry, S: services, N: non tradable services) Households (HW: labour endowed households, HC: capital endowed households) Intermediate consumption of commodity i in industry j Dividends Direct tax on firm's income Direct tax on household's h income Household h's expenditure in commodity i Public expenditures Total investment Investment in commodity i Capital revenue paid to firms Capital revenue paid to capitalists Return to capital from industry j Total capital revenue Firms' savings Household h's savings Government's savings Total savings Public transfers to workers Indirect tax on commodity i Output of industry j (at producer price)

YG

Production of commodity i (at consumer price) Wage bill paid by industry j Total wage bill paid to workers Firms' income Government's income

YH h

Household h's income

VXTi WL j

WL YF

AUTETA

15

16

FFC-PEP Workshop, August 2010

7.

3229.3

11,340

7,560

8. 6,960

10.

157.15 118.35

5,720

8,580

9.

INDUSTRIES

136

54,400

4,671

22,000

2,063.4

9,000

180

11.

54,400

2,700

12.

22,000

660

13.

COMMODITIES

8,700 9,180 57,100 22,660

285.6

1,544 27,599.7 5,479.45 1,336.05

120

6,250 9,000

29,000

TOTAL (1 to 15)

13,000 7,400

2,470 4,020 -2,590

2,842

5,557

15. Accumulation

9,947

13. Services

3,705

140

6.

8,700

11368

12. Industry

618

650 1,480

1,900

5.

14. Non-tradables

4263

28,860 18,500

7,400

11. Agriculture

10. Non-tradables

9. Services

8. Industry

7. Agriculture

6. Government

5. Firms

3. Labour endowed 28,860 households 4. Capital endowed 11,100 households 580

4. 1,440

3.

2. Capital

2.

AGENTS 5,760

1.

FACTORS

1. Labour

Expenses

Receipts 

MODEL AUTETA: A CLOSED ECONOMY WITH GOVERNMENT NUMERICAL EXAMPLE

8,700

8,700

14.

6,742

6,067.8

674.2

15.

ACC.

6,742

8,700

22,660

57,100

9,180

8,700

22,000

54,400

9,000

6,250

7,400

13,000

29,000

18,500

28,860

(1 to 15)

TOTAL

AUTETA: Equations and variables A. E Q U A TI O N S (72) Production 1. VA j  v j  XS j

4

2. CI j  io j  XS j

4

3. VAtr  Atr  LDtr  KDtr1 tr

tr

4. VAntr  LDntr 5. LDtr 

1

 tr  PVAtr  VAtr W

6. LDntr 

3

Pntr XS ntr   PDtr DI tr ,ntr tr

7. DI tr , j  aijtr , j CI j

W

3 1 12

Income and savings 8. YH hw  W   LD j  TG

1

j

9. YH hc     Rtr  KDtr  DIV

1

tr

10. YDH h  YH h  DTH h

2

11. SH h   hYDH h

2

12. YF  1      Rtr  KDtr

1

tr

13. SF  YF  DIV  DTF

1

14. YG   TI tr   DTH h  DTF

1

tr

h

15. SG  YG  G  TG

1

16. TI tr  txtr  Ptr  XStr

3

17. DTH h  tyhh  YH h

2

18. DTF  tyf  YF

1

Demand 19. Ctr ,h 

 tr ,h YDH h

PDtr  IT 20. INVtr  tr PDtr

21. DITtr   DI tr , j

6 3 3

j

AUTETA

17

Prices 22. PVA j  23. Rtr 

Pj XS j   PDtr DI tr , j

4

tr

VA j

PVAtr  VAtr  W  LDtr KDtr

3

24. PDtr  1  txtr  Ptr

3

Equilibrium 25. XStr  DITtr   Ctr ,h  INVtr

3

h

26. XS ntr  Pntr  G

1

27. LS   LD j

1

j

28. IT   SH h  SF  SG

1

h

B. E N DO G E N O U S Ctr ,h : CI j : DI tr , j :

(72)

Consumption of commodity tr by type h households (volume) Total intermediate consumption of industry j (volume) Intermediate consumption of commodity tr in industry j (volume)

6 4 12

Intermediate demand for commodity tr (volume) Receipts from direct taxation on firms' income

3 1

Receipts from direct taxation on household h's income Investment demand for commodity tr (volume) Total investment (value) Industry j demand for labour (volume)

2 3 1 4

Producer price of commodity i Consumer price of commodity tr Value added price for industry j

4 3 4

Rate of return to capital from industry tr Firms' savings Government's savings

3 1 1

Household h's savings Receipts from indirect tax on tr Value added for industry j (volume) Wage rate Output of industry j (volume)

2 3 4 1 4

YG :

Household h's disposable income Firms' income Government's income

2 1 1

YH h :

Household h's income

2

DITtr : DTF :

DTH h : INVtr : IT : LD j :

Pi : PDtr : PVA j :

Rtr : SF : SG :

SH h : TI tr : VA j :

W : XS j :

YDH h : YF :

18

V AR I AB L E S

FFC-PEP Workshop, August 2010

C. E XO G E N O U S

(7) Dividends Public expenditures

1 1

Industry j demand for capital (volume) Total labour supply (volume) Public transfers to households

3 1 1

V AR I A B L E S

DIV : G :

KDtr : LS :

TG :

D. P A RA M ET E R S Production functions Atr : aijtr , j :

 tr : io j :

vj :

Scale coefficient (Cobb-Douglas production function) Input-output coefficient Elasticity (Cobb-Douglas production function) Technical coefficient (Leontief production function) Technical coefficient (Leontief production function)

Tax rates tyf :

Tax rate on commodity tr Direct tax rate on firms' income

tyhh :

Direct tax rate on household h's income

txtr :

Other parameters  tr ,h :  :

Share of the value of commodity tr in disposable income of household h Share of the value of capital income received by capitalists

h :  tr :

Propensity to save Share of the value of commodity tr in total investment

E. S E TS i, j  I  AGR, IND, SER, NTR tr  TR  AGR, IND, SER h  H  HW , HC

AUTETA

All industries and commodities (AGR: agriculture, IND: industry, SER: services, NTR: non-tradable services) Tradable commodities Households (HW: labour endowed households, HC: capital endowed households)

19

AUTETA: Simulation results DEFINITIONS

SYMBOL

SIM1: LS +10%

BENCHMARK

SIM2: G-10%

SIM3: txi -25%

P R IC E S • wage rate

W

1

Ragr

1

• industry

Rind

1

• services

Rser

1

PVAagr

1

• industry

PVAind

• services • non-tradable services

0.969

0.991

1.007

(3.06)

(0.87)

1.069

1.015

(6.95)

(1.50)

(0.12)

1.140

1.050

0.997

(0.66)

RATE OF RETURN TO CAPITAL • agriculture

1.001 (0.34)

(13.96)

(5.00)

1.065

1.001

(6.55)

(0.12)

(2.01)

0.989

0.996

1.006

(-1.14)

(-0.40)

(0.56)

1

1.068

1.026

1.001

(6.82)

(2.60)

(0.06)

PVAser

1

1.007

0.995

1.012

(0.67)

(-0.48)

(1.20)

PVAntr

1

0.969

0.991

1.007

(-3.06)

(-0.87)

(0.66)

Pagr

1

1.000

1.000

1.000

(0.00)

(0.00)

(0.00)

• industry

Pind

1

1.051

1.019

0.987

(5.14)

(1.87)

• services

Pser

1

1.019

1.002

(1.90)

(0.17)

(0.10)

Pntr

1

0.984

0.996

1.001

1.020

VALUE ADDED PRICE • agriculture

PRODUCER PRICE • agriculture (numeraire)

• non-tradable services

(1.33)

1.001

(1.60)

(0.41)

1.020

1.020

(0.00)

(0.00)

1.104

1.069

(5.14)

(1.87)

1.050

1.032

(1.90)

(0.17)

(0.63)

9,736.14

9,171.93

8,960.91

(8.18)

(1.91)

(-0.43)

54,182.35

(0.12)

CONSUMER PRICE • agriculture • industry • services

PDagr

1.02

PDind

1.05

PDser

1.03

1.015

(0.49)

1.023

(2.49)

1.023

P R O D UC TI ON AN D F A CTO R S OUTPUT • agriculture

XSagr

9,000

• industry

XSind

54,400 58,036.85 55,664.14 (2.32)

(-0.40)

• services

XSser

22,000 23,283.73 22,131.55

22,176.56

• non-tradable services

XSntr

8,700

VAagr

7,200

(6.69) (5.84)

(0.60)

(0.80)

8,841.30

7,861.97

8,689.47

(1.62)

(-9.63)

(-0.12)

7,788.91

7,337.55

7,168.73

(8.18)

(1.91)

(-0.43)

18,824.38

VALUE ADDED • agriculture • industry

VAind

18,900 20,163.54 19,339.20 (2.32)

(-0.40)

• services

VAser

14,300 15,134.43 14,385.51

14,414.76

• non-tradable services

VAntr

6,960

KDagr

1,440

(6.69) (5.84)

(0.60)

(0.80)

7,073.04

6,289.57

6,951.58

(1.62)

(-9.63)

(-0.12)

1,440.00

1,440.00

1,440.00

(0.00)

(0.00)

(0.00)

11,340 11,340.00 11,340.00

11,340.00

CAPITAL • agriculture • industry

KDind

• services

KDser

20

5,720

(0.00)

(0.00)

(0.00)

5,720.00

5,720.00

5,720.00

(0.00)

(0.00)

(0.00)

FFC-PEP Workshop, August 2010

DEFINITIONS

SYMBOL

BENCHMARK

SIM1: LS +10%

SIM2: G-10%

LABOUR • agriculture

LDagr

5,760

• industry

LDind

• services • non-tradable services • total

SIM3: txi -25%

6,354.81

5,897.87

(10.33)

(2.39)

(-0.54)

7,560

8,887.59

8,006.88

7,484.61

(17.56)

(5.91)

(-1.00)

LDser

8,580

9,430.55

8,665.68

8,695.07

(9.91)

(1.00)

(1.34)

LDntr

6,960

7,073.04

6,289.57

6,951.58

(1.62)

(-9.63)

(-0.12)

28,860 31,746.00 28,860.00

28,860.00

LS

5,728.74

(10.00)

(0.00)

(0.00)

1,861.42

1,753.55

1,713.20

(8.18)

(1.91)

(-0.43)

33,995.57 36,268.30 34,785.55

33,859.55

TOTAL INTERMEDIATE CONSUMPTION • agriculture

CIagr

1,720.68

• industry

CIind

(6.69)

(2.32)

(-0.40)

• services

CIser

7,377.72

7,808.22

7,421.84

7,436.93

(5.84)

(0.60)

(0.80)

• non-tradable services

CIntr

1,666.19

1,693.25

1,505.69

1,664.17

(1.62)

(-9.63)

(-0.12)

127.27

119.90

117.14

(8.18)

(1.91)

(-0.43)

1,499.09

1,464.60

INTERMEDIATE CONSUMPT ION • agriculture

• industry

DIagr,agr

117.65

DIind,agr

1,470.99

1,591.31 (8.18)

(1.91)

(-0.43)

DIser,agr

132.04

142.84

134.56

131.47

(8.18)

(1.91)

(-0.43)

DIagr,ind

3,165.98

3,377.64

3,239.55

3,153.31

(6.69)

(2.32)

(-0.40)

26,294.64 28,052.53 26,905.67

26,189.43

DIind,ind

• services

• non-tradable services

(6.69)

(2.32)

(-0.40)

DIser,ind

4,534.95

4,838.13

4,640.33

4,516.81

(6.69)

(2.32)

(-0.40)

DIagr,ser

154.069

163.06

154.99

155.31

(5.84)

(0.60)

(0.80)

DIind,ser

5,220.35

5,524.97

5,251.57

5,262.25

(5.84)

(0.60)

(0.80)

DIser,ser

2,003.3

2,120.20

2,015.28

2,019.38

(5.84)

(0.60)

(0.80)

DIagr,ntr

116.03

117.91

104.85

115.89

(1.62)

(-9.63)

(-0.12)

DIind,ntr

1,272.87

1,293.55

1,150.26

1,271.33

(1.62)

(-9.63)

(-0.12)

DIser,ntr

277.28

281.79

250.57

276.95

(1.62)

(-9.63)

(-0.12)

IN C O M E AN D S AV IN G S INCOME • labour endowed households

YHhw

29,000

30,913.90 28,748.02 29,191.74

• capital endowed households

YHhc

13,000

14,234.64 13,356.23 13,047.06 (9.50)

(2.74)

(0.36)

• firms

YF

7,400

8,223.10

7,637.49

7,431.37

(11.12)

(3.21)

(0.42)

• government

YG

6,250

6,909.66

6,433.04

5,346.46

(10.55)

(2.93)

(14.46)

SHhw

2,842

3,029.56

2,817.31

2,860.79

SHhc

2,470

2,704.58

2,537.69

2,478.94

(9.50)

(2.74)

(0.36)

• firms

SF

4,020

4,678.48

4,209.99

4,045.10

(16.38)

(4.73)

(0.62)

• government

SG

2,590

(6.60)

(0.87)

(0.66)

SAVINGS • labour endowed households • capital endowed households

(6.60)

(0.66)

1,930.34 1,536.96 3,493.54 (25.47)

AUTETA

(0.87)

(40.66)

(34.89)

21

DEFINITIONS

SYMBOL

BENCHMARK

SIM1: LS +10%

SIM2: G-10%

DISPOSABLE INCOME

SIM3: txi -25%

• labour endowed households

YDHhw

28,420

30,295.62 28,173.06 28,607.91

• capital endowed households

YDHhc

12,350

13,522.91 12,688.42 12,394.71

(0.87)

(0.66)

(9.50)

(2.74)

(0.36)

194.72

183.44

(8.18)

(1.91)

(25.33)

3,028.55

2,814.26

1,990.13

(12.17)

(4.23)

711.75

665.07

(7.84)

(0.77)

(24.32)

618.28

574.96

583.84

667.81

652.35

(6.60)

RECEIPTS FROM INDIRECT TAXATION • agricultural products • industrial products • services

TIagr

180

134.41

TIind

2,700

TIser

660

DTHhs

580

DTHhc

650

711.73 (9.50)

(2.74)

(0.36)

1,480

1,644.62

1,527.50

1,486.27

(11.12)

(3.21)

(0.42)

4,455.24

4,143.10

4,227.77

(26.29)

499.46

RECEIPTS FROM DIRECT TAXATION • labour endowed households • capital endowed households • firms

DTF

(6.60)

(0.87)

(0.66)

D E M AN D LABOUR ENDOWED HOUSEHOLDS – CONSUMPTION • agriculture

Cagr,hw

4,179.41

• industry

Cind,hw

10,830.46

• services

Cser,hw

9,657.28

(6.60)

(0.87)

(1.16)

10,980.86 10,539.83 11,180.90 (1.39)

10,103.13

(2.68)

9,557.18

(3.24)

9,782.89

(4.62)

(1.04)

663.43

622.49

(9.50)

(2.74)

(0.86)

3,560.15

3,633.19

(1.30)

CAPITAL ENDOWED HOUSEHOLDS – CONSUMPTION • agriculture

Cagr,hc

605.88

• industry

Cind,hc

3,529.81

3,676.10 (4.15)

(0.86)

(2.93)

• services

Cser,hc

5,395.15

5,797.65

5,533.62

5,449.07

(6.97)

(2.57)

(1.00)

8,700

8,700.00

7,830.00

8,700.00

(0.00)

(-10.00)

(0.00)

3,785.88

3,619.29

3,541.64

(6.53)

(1.85)

(-0.34)

Public expenditures

G

611.07

INTERMEDIATE DEMAND • agricultural products

DITagr

3,553.73

• industrial products

DITind

34,258.85

• services

DITser

6,947.57

INVagr

660.98

INVind

5,780.88

36,462.36 34,806.59 34,187.62 (6.43)

(1.60)

(-0.21)

7,382.95

7,040.75

6,944.60

(6.27)

(1.34)

(-0.04)

831.60

787.06

(25.81)

(19.08)

(12.19)

6,917.53

6,757.57

5,180.64

(19.66)

(16.90)

(10.38)

8,482.28

8,028.02

5,891.29

(25.81)

(19.08)

INVESTMENT DEMAND • agricultural products • industrial products • total

22

IT

6,742

580.42

(12.62)

FFC-PEP Workshop, August 2010

Model EXTER: An Open Economy with Government Social accounting matrix Equations and variables Simulation results

24

FFC-PEP Workshop, August 2010 RK

ES,HW

14. Services

SHHW YHHW

TOTAL (1 to 19) YHHC

YF

YG Rrow

SG CAB

ETS

18. Services

19. Accumulation

ETI

G

17. Industry SF

DIV row

DTF

ETA

SHHC

ES,HC

EI,HC

EA,HC

DTHHC

DIV

TG

7.

16. Agriculture

15. Non-tradables

EI,HW

13. Industry

DTHHW

EA,HW

WL

RKrow

RKF

RKHC

12. Agriculture

11. Non-tradables

10. Services

9. Industry

8. Agriculture

7. Rest of the World

6. Government

5. Firms

3. Labour endowed households 4. Capital endowed households WL

6.

8.

VXA

CIS,A

CII,A

CIA,A

RKA

5.

2. Capital

4.

WLA

3.

AGENTS

1. Labour

Receipts  FACTORS Expenses  1. 2.

VXI

CIS,I

CII,I

CIA,I

RKI

WLI

9.

VXS

CIS,S

CII,S

CIA,S

RKS

WLS

10.

INDUSTRIES

VXN

CIS,N

CII,N

CIA,N

WLN

11.

VXDA

VDA

IMA

TIA

12.

VXDI

VDI

IMI

TII

13.

VXDS

VDS

IMS

TIS

14.

DOMESTIC MARKET

VXDN

VDN

15.

ETA

EXA

TEA

16.

ETI

EXI

17.

ETS

EXS

18.

EXPORT MARKET

MODEL EXTER: AN OPEN ECONOMY WITH GOVERNMENT SOCIAL ACCOUNTING MATRIX

IT

IVI

IVA

19.

ACC.

ST

ETS

ETI

ETA

VXDN

VXDS

VXDI

VXDA

VXN

VXS

VXI

VXA

Rrow

YG

YF

YHHC

YHHW

RK

WL

(1 to 19)

TOTAL

Legend i, j  A, I , S , N  Industries and commodities (A: agriculture, I: industry, S: services, N: nonh  HW , HC

CAB CI i , j

DIV

DIVrow DTF

DTH h EX i ETi Ei ,h G

IM i IT

IVi Rrow RK F RK HC RK j

RK row RK SF

SG

SH h ST

TE i TG

TI i VD j VX

j

VXDi WL j

WL YF

YG

YH h

EXTER

tradable services) Households (HW: labour endowed households, HC: capital endowed households) Current account balance Intermediate consumption of commodity i in industry j Dividends paid to capitalists Dividends paid to the rest of the World Direct tax on firm's income Direct tax on household's h income Exports of commodity i (excluding taxes) Exports of commodity i (including taxes) Household h's expenditure in commodity i Public expenditures Imports of commodity i Total investment Investment in commodity i Receipts of the rest of the World Capital revenue paid to firms Capital revenue paid to capitalists Return to capital from industry j Capital revenue paid to rest of the World Total capital revenue Firms' savings Government's savings Household h's savings Total savings Tax on exports of commodity i Public transfers to workers Indirect tax and tariff duties on commodity i Output of industry j sold on domestic market (at producer price) Output of industry j (at producer price) Composite commodity i (at consumer price) Wage bill paid by industry j Total wage bill paid to workers Firms' income Government's income Household h's income

25

26

FFC-PEP Workshop, August 2010 11,368 9,947

13. Industry

14. Services

6.

140

7.

2,200 7,424

2,842

29,000 13,000 6,475 10,549.46 19,674

18. Services

19. Accumulation

TOTAL (1 to 19)

1,709.46

8,160

17. Industry

8,700 1,890

2,470 2,910

5,557

3,705

618

370

650 1,295

1,900

5.

16. Agriculture

15. Non-tradables

4,263

28,860 18,500

925

6,475

12. Agriculture

11. Non-tradables

10. Services

9. Industry

8. Agriculture

6. Government 7. Rest of the World

5. Firms

3. Labour endowed 28,860 households 4. Capital endowed 11,100 households 580

4.

8.

9,000

136

1,504

160

1,440

3.

2. Capital

2.

AGENTS 5,760

1.

FACTORS

1. Labour

Receipts  Expenses 

177.15

5,720

8,580

10.

118.35

6,960

11.

54,400

5,186

22,000

2,063.4

7,200

379

190.24

12.

675

14.

46,240 19,800

15,300 2,700

7,069.22

13.

DOMESTIC MARKET

8,700 7,769.24 68,609.22 23,175

285.6

29,616.81 5,459.45 1,336.05

697.19

11,340

7,560

9.

INDUSTRIES

1,800

90

16.

8,160

17.

2,200

2,200

18.

EXPORT MARKET

8,700 1,890 8,160

8,700

15.

MODEL EXTER: AN OPEN ECONOMY WITH GOVERNMENT NUMERICAL EXAMPLE

17,355.46

15,619.91

1,735.55

19.

ACC.

17,355.46

2,200

8,160

1,890

8,700

23,175

68,609.22

7,769.24

8,700

22,000

54,400

9,000

19,674

10,549.46

6,475

13,000

29,000

18,500

28,860

(1 to 19)

TOTAL

EXTER: Equations and variables A. E Q U A TI O N S (104) Production 1. VA j  v j  XS j

4

2. CI j  io j XS j

4

3. VAtr  Atr  LDtr  KDtr1 tr

3

tr

4. VAntr  LDntr   PVAtr  VAtr 5. LDtr  tr

1 3

W

6. LDntr 

Pntr XS ntr   PCtr DI tr ,ntr

1

tr

W

7. DI tr , j  aijtr , j CI j

12

Income and savings 8. YH hw  W   LD j  TG

1

j

9. YH hc     Rtr  KDtr  DIV

1

tr

10. YDH h  YH h  DTH h

2

11. SH h   hYDH h

2

12. YF  1    ROW   Rtr  KDtr

1

tr

13. SF  YF  DIV  DIV ROW  DTF

1

14. YG   TI tr   DTH h  DTF   TIM tr   TIEtr tr

h

tr

1

tr

15. SG  YG  G  TG 16. TI tr  txtr  PLtr  Dtr  txtr  1  tmtr  e  PWM tr  M tr

1 3

17. TIM tr  tmtr  e  PWM tr  M tr

3

18. TIEtr  tetr  PEtr  EX tr

3

19. DTH h  tyhh  YH h

2

20. DTF  tyf  YF

1





Demand 21. C tr ,h 

 tr ,h YDH h

PCtr  IT 22. INVtr  tr PCtr

23. DITtr   DI tr , j

6 3 3

j

EXTER

27

Prices 24. PVA j  25. Rtr 

Pj XS j   PCtr DI tr , j

4

tr

VA j

PVAtr  VAtr  W  LDtr KDtr

3

26. PDtr  1  txtr  PLtr

3

27. PM tr  1  txtr  1  tmtr  e PWM tr

3

e PWE tr

28. PEtr 

3

1  tetr 

PDtr Dtr  PM tr M tr Qtr PL D  PEtr EX tr 30. Ptr  tr tr XStr

29. PCtr 

3 3

31. PINDEX    j PVA j

1

j

International Trade



32. XStr  BtrE  trE EX tr tr  1   trE  Dtr tr E

 PE 33. EX tr   tr  PLtr

34. Qtr 

AtrM



M tr

 PDtr 35. M tr    PM tr

E

  1   trE   E     tr M M tr tr

   

1

 trE

3

 trE



   

3

Dtr

 1

   trM   M    1   tr



M tr



M Dtr tr



1

trM

3

 trM

3

Dtr

36. CAB  e PWM tr M tr  ROW  Rtr KDtr  DIV ROW  e PWE tr EX tr tr

tr

1

tr

Equilibrium 37. Qtr  DITtr   Ctr ,h  INVtr

3

h

38. XS ntr  Pntr  G

1

39. LS   LD j

1

j

40. IT   SH h  SF  SG  CAB

1

h

28

FFC-PEP Workshop, August 2010

B. E N DO G E N O U S Ctr ,h : CI j :

Dtr : DI tr , j :

DITtr : DTF :

DTH h : e :

EX tr : INVtr : IT : LD j :

M tr : Pi : PCtr : PDtr : PEtr : PINDEX :

PLtr : PM tr : PVA j :

Qtr : Rtr : SF : SG :

SH h : TI tr : TIEtr : TIM tr : VA j : W : XS j :

YDH h : YF : YG :

YH h :

C. E XO G E N O U S CAB : DIV :

DIV ROW : G :

EXTER

V AR I AB L E S

(104)

Consumption of commodity tr by type h households (volume) Total intermediate consumption of industry j (volume) Demand for domestic commodity tr (volume) Intermediate consumption of commodity tr in industry j (volume) Intermediate demand for commodity tr (volume) Receipts from direct taxation on firms' income Receipts from direct taxation on household h's income Exchange rate Exports of commodity tr (volume) Investment demand for commodity tr (volume) Total investment Industry j demand for labour (volume) Imports of commodity tr (volume) Producer price of commodity i Consumer price of composite commodity tr Domestic price of commodity tr including taxes Domestic price of exported commodity tr GDP deflator Domestic price of commodity tr (excluding taxes) Domestic price of imported commodity tr Value added price for industry j Demand for composite commodity tr (volume) Rate of return to capital in industry tr Firms' savings Government's savings Household h's savings Receipts from indirect tax on tr Receipts from tax on export tr Receipts from import duties tr Value added for industry j (volume) Wage rate Output of industry j (volume) Household h's disposable income Firms' income Government's income Household h's income (15) Current account balance Dividends paid to capitalists households Dividends paid to the rest of the World Public expenditures

6 4 3 12 3 1 2 1 3 3 1 4 3 4 3 3 3 1 3 3 4 3 3 1 1 2 3 3 3 4 1 4 2 1 1 2

V AR I A B L E S

1 1 1 1 29

KDtr : LS :

PWE tr : PWM tr : TG :

Industry j demand for capital (volume) Total labour supply (volume) World price of export tr World price of import tr Public transfers to workers

3 1 3 3 1

D. P A RA M ET E R S Production functions Scale coefficient (Cobb-Douglas production function) Atr : Input-output coefficient aijtr , j : Elasticity (Cobb-Douglas production function)  tr : Technical coefficient (Leontief production function) io j : Technical coefficient (Leontief production function) vj : CES and CET functions Scale coefficient (CES function) AtrM : E Scale coefficient (CET function) Btr : M Share parameter (CES function)  tr : E Share parameter (CET function)  tr : E Transformation parameter (CET function)  tr : M Substitution parameter (CES function)  tr : M Substitution elasticity (CES function)  tr : E Transformation elasticity (CET function)  tr : Tax rates tetr : tmtr : txtr : tyhh : tyf :

Tax on exports tr Import duties on commodity tr Tax rate on commodity tr Direct tax rate on household h's income Direct tax rate on firms' income

Other parameters Share of industry j in total value added j : Share of the value of commodity tr in disposable of household h  tr ,h : Share of the value of capital income received by capitalists  : ROW : Share of capital income received by foreigners h : Propensity to save  tr : Share of the value of commodity tr in total investment E. sets

i, j  I  AGR, IND, SER, NTR tr  TR  AGR, IND, SER h  H  HW , HC

30

All industries and commodities (AGR: agriculture, IND: industry, SER: services, NTR: non-tradable services) Tradable commodities Households (HW: labour endowed households, HC: capital endowed households) FFC-PEP Workshop, August 2010

EXTER: Simulation results DEFINITIONS

SYMBOL

BENCHMARK

SIM1: tmind -50%

SIM2: tmind -50%; SG FIXED

P R I CE S • wage rate

W

1

PINDEX

1

e

1

• agriculture

Ragr

1

• industry

Rind

1

• services

Rser

1

• agriculture

PVAagr

1

• industry

PVAind

1

• services

PVAser

1

PVAntr

1

• agriculture

Pagr

1

• industry

Pind

1

• services

Pser

1

• non-tradable services

Pntr

1

• GDP Deflator • Exchange rate (numeraire)

0.994

(0.59)

0.990

0.946

(5.39)

0.969

(1.02)

(3.10)

1.000

1.000

(0.00)

(0.00)

0.985

1.002

0.971

1.017

1.008

0.983

RATE OF RETURN TO CAPITAL (1.48) (2.93) (0.76)

(0.25) (1.75) (1.67)

VALUE ADDED PRICE

• non-tradable services

0.992

(0.77)

0.980

(2.00)

0.999 (-0.05)

0.994 (-0.59)

0.957

(4.29)

0.988

(1.17)

0.961

(3.92)

0.961

(-5.39)

PRODUCER PRICE 0.982

0.953

(1.81)

(4.74)

(4.58)

(4.62)

(1.91)

(4.61)

0.954 0.981 0.984

(1.60)

0.954 0.953 0.944

(5.58)

PRICE OF COMPOSITE COMMODITY • agriculture

PCagr

1.025

• industry

PCind

1.115

• services

PCser

1.03

• agriculture

PDagr

1.02

• industry

PDind

1.05

• services

PDser

1.03

1.003

0.967

(2.15)

(5.67)

(6.76)

(6.79)

(1.87)

(4.62)

1.039 1.011

1.039 0.982

CONSUMER PRICE 0.997

(2.27)

0.993

(5.40)

1.008

(2.12)

0.959

(5.98)

0.993

(5.44)

0.976

(5.25)

PRODUCER PRICE OF COMMODITY SOLD DO MESTICALLY • agriculture

PLagr

1

• industry

PLind

1

• services

PLser

1

PMagr

1.122

• industry

PMind

1.312

• services

PMser

1.03

0.977

0.940

(2.27)

(5.98)

(5.40)

(5.44)

(2.12)

(5.25)

1.122

1.122

0.946 0.979

0.946 0.947

PRICE OF IMPORTS • agriculture

EXTER

(0.00)

(0.00)

1.181

1.181

(10.00)

(10.00)

(0.00)

(0.00)

1.030

1.030

31

DEFINITIONS

SYMBOL

BENCHMARK

SIM1: tmind -50%

SIM2: tmind -50%; SG FIXED

PRODUCER PRICE OF EXPORTED COMMODITY • agriculture

PEagr

1

• industry

PEind

• services

PEser

1.000

1.000

(0.00)

(0.00)

1

1.000

1.000

(0.00)

(0.00)

1

1.000

1.000

(0.00)

(0.00)

PRODUCTION AND FACTORS

OUTPUT • agriculture

XSagr

9,000

8,935.33

9,426.63

• industry

XSind

54,400

53,883.75

56,006.47

• services

XSser

22,000

22,178.64

22,514.77

(0.81)

(2.34)

• non-tradable services

XSntr

8,700

8,841.68

7,136.18

(1.63)

(-17.98)

• agriculture

VAagr

7,200

7,148.27

7,541.30

• industry

VAind

18,900

18,720.64

19,458.13

• services

VAser

14,300

14,416.12

14,634.60

(0.81)

(2.34)

• non-tradable services

VAntr

6,960

7,073.34

5,708.94

(1.63)

(-17.98)

• agriculture

LDagr

5,760

5,708.31

6,103.30

• industry

LDind

7,560

7,381.92

8,130.55

• services

LDser

8,580

8,696.43

8,917.20

(1.36)

(3.93)

• non-tradable services

LDntr

6,960

7,073.34

5,708.94

(1.63)

(-17.98)

LS

28,860

28,860.00

28,860.00

(0.00)

(0.00)

KDagr

1,440

1,440.00

1,440.00

• industry

KDind

• services

(0.72) (0.95)

(4.74) (2.95)

VALUE ADDED (0.72) (0.95)

(4.74) (2.95)

LABOUR

• total

(0.90) (2.36)

(5.96) (7.55)

CAPITAL • agriculture

(0.00)

(0.00)

11,340

11,340.00

11,340.00

(0.00)

(0.00)

KDser

5,720

5,720.00

5,720.00

(0.00)

(0.00)

DIagr,agr

156.08

154.96

163.48

DIind,agr

INTERMEDIATE CONSUMPT ION • agriculture

• industry

• services

32

(-0.72)

(4.74)

1,349.03

1,339.34

1,412.98

(-0.72)

(4.74)

DIser,agr

132.04

131.09

138.30

(-0.72)

(4.74)

DIagr,ind

680.12

673.66

700.20

(-0.95)

(2.95)

DIind,ind

26,565.21

26,313.11

27,349.70

(-0.95)

(2.95)

DIser,ind

5,034.95

4,987.17

5,183.64

(-0.95)

(2.95)

DIagr,ser

172.81

174.22

176.86

(0.81)

(2.34)

DIind,ser

4,896.93

4,936.69

5,011.51

(0.81)

(2.34)

DIser,ser

2,003.30

2,019.57

2,050.18

(0.81)

(2.34)

FFC-PEP Workshop, August 2010

DEFINITIONS • non-tradable services

SYMBOL

BENCHMARK

DIagr,ntr

115.45

DIind,ntr

1,198.39

DIser,ntr

277.28

SIM1: tmind -50%

SIM2: tmind -50%; SG FIXED

117.33

94.70

(1.63)

(-17.98)

1,217.90

982.98

(1.63)

(-17.98)

281.80

227.44

(1.63)

(-17.98)

1,625.39

1,714.76

TOTAL INTERMEDIATE CONSUMPTION • agriculture

CIagr

1,637.16

• industry

CIind

• services • non-tradable services

(-0.72)

(4.74)

32,280.28

31,973.95

33,233.54

(-0.95)

(2.95)

CIser

7,073.04

7,130.48

7,238.54

(0.81)

(2.34)

CIntr

1,591.12

1,617.03

1,305.12

(1.63)

(-17.98)

I N CO M E A N D S A V I N G S

INCOME • labour endowed households

YHhw

29,000

28,829.25

27,444.20

• capital endowed households

YHhc

13,000

12,813.59

13,063.76

• firms

YF

6,475

6,366.26

6,512.19

• government

YG

10,549.46

8,323.26

8,587.13

(0.59) (1.43) (1.68)

(20.53)

(5.37) (0.49) (0.57)

(18.60)

DISPOSABLE INCOME • labour endowed households

YDHhw

28,420

28,252.67

26,895.31

• capital endowed households

YDHhc

12,350

12,172.91

12,410.57

• labour endowed households

SHhw

2,842

2,825.27

2,689.53

• capital endowed households

SHhc

2,470

2,434.58

2,482.11

• firms

SF

2,910

2,823.01

2,939.75

• government

SG

1,709.96

456.75

1,709.46

(0.59) (1.43)

(5.37) (0.49)

SAVINGS (0.59) (1.43) (2.99)

(5.37) (0.49) (1.02)

(126.72)

(0.00)

RECEIPTS FROM DIRECT TAXATION • labour endowed households

DTHhw

580

576.59

548.88

• capital endowed households

DTHhc

650

640.68

653.19

DTF

1,295

1,273.25

1,302.44

• agricultural products

TIagr

152.34

146.58

146.62

• industrial products

TIind

3,244.22

3,009.24

3,126.,53

• services

TIser

675

665.98

654.27

TIEagr

90

91.84

101.38

(2.04)

(12.65)

• agricultural products

TIMagr

37.9

• industrial products

TIMind

3,825

• firms

(0.59) (1.43) (1.68)

(5.37) (0.49) (0.57)

RECEIPTS FROM INDIRECT TAXATION (3.78) (7.24) (1.34)

(3.75) (3.63) (3.07)

RECEIPTS FROM TAXES ON EXPORTS • agricultural products

RECEIPTS FROM DUTIES ON IMPORTS

EXTER

35.68

(5.85)

1,943.42 (49.19)

34.41

(9.21)

2,019.41

(47.21)

33

DEFINITIONS

SYMBOL

BENCHMARK

SIM1: tmind -50%

SIM2: tmind -50%; SG FIXED

D E M AN D LABOUR ENDOWED HOUSEHOLDS – CONSUMPTION • agriculture

Cagr,hw

4,158.62

• industry

Cind,hw

• services

Cser,hw

4,225.07

4,172.01

(1.60)

(0.32)

10,196.69

10,871.86

10,352.59

(6.62)

(1.53)

9,657.28

9,782.96

9,582.25

(1.30)

(0.78)

607.30

642.23

CAPITAL ENDOWED HOUSEHOLDS – CONSUMPTION • agriculture

Cagr,hc

602.87

• industry

Cind,hc

• services

Cser,hc

Public expenditures

G

(0.73)

(6.53)

3,323.25

3,513.18

3,582.82

(5.72)

(7.81)

5,395.15

5,418.90

5,684.44

(0.44)

(5.36)

8,700

8,700.00

6,737.67

(0.00)

(-22.56)

INTERMEDIATE DEMAND • agricultural products

DITagr

1,124.47

1,120.17

1,135.24

• industrial products

DITind

34,009.57

33,807.05

34,757.18

• services

DITser

7,447.57

7,419.63

7,599.55

• agricultural products

INVagr

1,693.05

1,500.46

1,783.36

• industrial products

INVind

14,010.50

13,030.66

14,935.32

IT

17,355.46

15,050.11

17,244.86

(-13.28)

(-0.64)

(0.38) (0.60) (0.38)

(0.96) (2.20) (2.04)

INVESTMENT DEMAND

• total

(11.38)

(6.99)

(5.33) (6.60)

LOCAL OUTPUT SOLD ON DOMESTIC MARKET • agricultural products

Dagr

7,200

7,097.96

7,394.45

• industrial products

Dind

46,240

45,603.91

47,398.87

• services

Dser

19,800

19,917.22

20,148.86

(0.59)

(1.76)

• agriculture

Qagr

7,579

7,453.00

7,732.84

• industry

Qind

61,540

61,222.75

63,627.91

• services

Qser

22,500

22,261.48

22,866.24

(0.54)

(1.63)

(1.42) (1.38)

(2.70) (2.51)

COMPOSITE COMMODITY (1.66) (0.52)

(2.03) (3.39)

IN T E RN A TI ON AL T R AD E IMPORTS • agricultural products

Magr

379

356.83

344.09

• industrial products

Mind

15,300

15,547.32

16,155.25

(1.62)

(5.59)

• services

Mser

2,700

2,704.37

2,718.09

(0.16)

(0.67)

EXagr

1,800

1,836.79

2,027.67

• industrial products

EXind

• services Current account balance

(5.85)

(-9.21)

EXPORTS • agricultural products

34

(2.04)

(12.65)

8,160

8,274.40

8,601.86

(1.40)

(5.42)

EXser

2,200

2,260.95

2,362.83

(2.77)

(7.40)

CAB

7,424

7,424.00

7,424.00

(0.00)

(0.00)

FFC-PEP Workshop, August 2010

Model EXTER 2: Non-Infinite Foreign Demand for Exports Equations and variables Simulation results

EXTER 2: Equations and variables A. E Q U A TI O N S (110) Production 1. VA j  v j  XS j

4

2. CI j  io j  XS j

4

3. VAtr  Atr  LDtr  KDtr1 tr

3

tr

4. VAntr  LDntr   PVAtr  VAtr 5. LDtr  tr

1

6. LDntr 

1

3

W Pntr XS ntr   PCtr DI tr ,ntr tr

W

7. DI tr , j  aijtr , j CI j

12

Income and savings 8. YH hw  W   LD j  TG

1

j

9. YH hc     Rtr  KDtr  DIV

1

tr

10. YDH h  YH h  DTH h

2

11. SH h   hYDH h

2



12. YF  1    ROW

 R

13. SF  YF  DIV  DIV

 KDtr

1

 DTF

1

tr

tr ROW

14. YG   TI tr   DTH h  DTF   TIM tr   TIEtr tr

h

15. SG  YG  G  TG

tr



1

tr



1

16. TI tr  txtr  PLtr  Dtr  txtr  1  tmtr  e  PWM tr  M tr

3

17. TIM tr  tmtr  e  PWM tr  M tr

3

18. TIEtr  tetr  PEtr  EX tr

3

19. DTH h  tyhh  YH h

2

20. DTF  tyf  YF

1

Demand 21. Ctr ,h 

 tr ,h YDH h

PCtr  IT 22. INVtr  tr PCtr

23. DITtr   DI tr , j

6 3 3

j

36

FFC-PEP Workshop, August 2010

Prices 24. PVA j  25. Rtr 

Pj XS j   PCtr DI tr , j

4

tr

VA j

PVAtr  VAtr  W  LDtr KDtr

3

26. PDtr  1  txtr  PLtr

3

27. PM tr  1  txtr 1  tmtr   e  PWM tr

3

28. PEtr 

e PEtrFOB

3

1  tetr 

PDtr Dtr  PM tr M tr Qtr PL D  PEtr EX tr 30. Ptr  tr tr XStr

29. PCtr 

3 3

31. PINDEX    j PVA j

1

j

International Trade 32. XStr 



BtrE

 trE

 PEtr  PLtr

33. EX tr  



EX tr  1  

E tr

  1   trE   E     tr

 PWE 34. EXDtr  EXDtr0  FOBtr  PEtr



   

   

E tr





tr

3

Dtr

 trE

3

M

   trM   M    1   tr

3

 trE

35. Qtr  AtrM  trM M tr tr  1   trM  Dtr tr  PDtr 36. M tr    PM tr

1

E E D  tr  tr

M

   



1

trM

3

 trM

3

Dtr

37. CAB  e PWM tr M tr  ROW  Rtr  KDtr  DIV ROW  e PEtrFOB EX tr tr

tr

1

tr

Equilibrium 38. Qtr  DITtr   Ctr ,h  INVtr

3

h

39. EXDtr  EX tr

3

41. XS ntr Pntr  G

1

40. LS   LD j

1

j

41. IT   SH h  SF  SG  CAB

1

h

EXTER 2

37

B. E N DO G E N O U S Ctr ,h : CI j :

Dtr : DI tr , j :

DITtr : DTF :

DTH h : e :

EX tr : EXDtr : INVtr : IT :

LD j :

M tr :

Pi : PCtr : PDtr : PEtr : PEtrFOB : PINDEX :

PLtr : PM tr : PVA j :

Qtr : Rtr : SF : SG :

SH h : TI tr : TIEtr : TIM tr : VA j : W :

XS j :

YDH h : YF :

YG :

YH h :

38

(110) Consumption of commodity tr by type h households (volume) Total intermediate consumption of industry j (volume) Demand for domestic commodity tr (volume) Intermediate consumption of commodity tr in industry j (volume) Intermediate demand for commodity tr (volume) Receipts from direct taxation on firms' income Receipts from direct taxation on household h's income Exchange rate Exports of commodity tr (volume) Demand for exports in commodity tr (volume) Investment demand for commodity tr (volume) Total investment Industry j demand for labour (volume) Imports of commodity tr (volume) Producer price of commodity i Consumer price of composite commodity tr Domestic price of commodity tr including taxes Domestic price of exported commodity tr FOB price of exported commodity tr GDP deflator Domestic price of commodity tr (excluding taxes) Domestic price of imported commodity tr Value added price for industry j Demand for composite commodity tr (volume) Rate of return to capital in industry tr Firms' savings Government's savings Household h's savings Receipts from indirect tax on tr Receipts from tax on export tr Receipts from import duties tr Value added for industry j (volume) Wage rate Output of industry j (volume) Household h's disposable income Firms' income Government's income Household h's income V AR I AB L E S

6 4 3 12 3 1 2 1 3 3 3 1 4 3 4 3 3 3 3 1 3 3 4 3 3 1 1 2 3 3 3 4 1 4 2 1 1 2

FFC-PEP Workshop, August 2010

C. E XO G E N O U S

(18) Current account balance Dividends paid to capitalists households Dividends paid to the rest of the World Benchmark value of demand for exports tr (volume) Public expenditures Industry j demand for capital (volume) Total labour supply (volume) World price of export tr World price of import tr Public transfers to workers

V AR I A B L E S

CAB :

DIV :

DIV ROW : EXDtr0 :

G :

KDtr : LS :

PWE tr : PWM tr : TG :

1 1 1 3 1 3 1 3 3 1

D. P A RA M ET E R S Production functions Scale coefficient (Cobb-Douglas production function) Atr : Input-output coefficient aij tr , j : Elasticity (Cobb-Douglas production function)  tr : Technical coefficient io j : Technical coefficient vj : CES and CET functions Scale coefficient (CES function) AtrM : E Scale coefficient (CET function) Btr : M Share parameter (CES function)  tr : E Share parameter (CET function)  tr : E Transformation parameter (CET function)  tr : M Substitution parameter (CES function)  tr : M Substitution elasticity (CES function)  tr : E Transformation elasticity (CET function)  tr : Tax rates tetr : tmtr : txtr : tyf :

tyhh :

Tax on exports tr Import duties on commodity tr Tax rate on commodity tr Direct tax rate on firms' income Direct tax rate on household h's income

Other parameters Share of industry j in total value added j : E Price elasticity of demand for exports tr  tr Share of the value of commodity tr in disposable of household h  tr ,h : Share of the value of capital income received by capitalists  : ROW  : Share of capital income received by foreigners h : Propensity to save  tr : Share of the value of commodity tr in total investment EXTER 2

39

E.

S E TS

i, j  I  AGR, IND, SER, NTR tr  TR  AGR, IND, SER h  H  HW , HC

40

All industries and commodities (AGR: agriculture, IND: industry, SER: services, NTR: non-tradable services) Tradable commodities Households (HW: labour endowed households, HC: capital endowed households)

FFC-PEP Workshop, August 2010

EXTER 2: Simulation results DEFINITIONS

SYMBOL

BENCHMARK

SIM1: tmind -50%



E tr

= 3.0

SIM2: tmind -50%

 trE = 0.5

P R IC E S • wage rate

W

1

PINDEX

0.988

0.968

(-1.18)

(-3.16)

1

0.983

0.961

(-1.69)

(-3.94)

e

1

1.000

1.000

(0.00)

(0.00)

Ragr

1

0.978

0.956

• industry

Rind

• services

• GDP Deflator • Exchange rate (numeraire)

RATE OF RETURN TO CAPITAL • agriculture

(-2.16)

(-4.42)

1

0.963

0.935

(-3.73)

(-6.47)

Rser

1

1.000

0.973

(-0.05)

(-2.67)

PVAagr

1

0.986

0.966

• industry

PVAind

• services • non-tradable services

VALUE ADDED PRICE • agriculture

(-1.38)

(-3.41)

1

0.973

0.948

(-2.72)

(-5.16)

PVAser

1

0.993

0.970

(-0.73)

(-2.96)

PVAntr

1

0.988

0.968

(-1.18)

(-3.16)

Pagr

1

0.976

0.957

• industry

Pind

• services • non-tradable services

PRODUCER PRICE • agriculture

(-2.37)

(-4.26)

1

0.949

0.933

(-5.08)

(-6.74)

Pser

1

0.975

0.956

(-2.48)

(-4.39)

Pntr

1

0.978

0.960

(-2.15)

(-3.99)

0.998

0.980

CONSUMER PRICE OF COM POSITE COMMODITY • agriculture

PCagr

1.025

• industry

PCind

• services

PCser

(-2.67)

(-4.41)

1.115

1.036

1.022

(-7.11)

(-8.29)

1.03

1.006

0.989

(-2.35)

(-3.99)

0.991

0.973

CONSUMER PRICE OF COMMODITY SOLD DOMESTICALLY • agriculture

PDagr

1.02

• industry

PDind

• services

PDser

(-2.82)

(-4.65)

1.05

0.988

0.970

(-5.90)

(-7.58)

1.03

1.003

0.983

(-2.67)

(-4.53)

0.972

0.954

PRODUCER PRICE OF COMMODITY S OLD DOMESTICALLY • agriculture

PLagr

1

• industry

PLind

• services

(-2.82)

(-4.65)

1

0.941

0.924

(-5.90)

(-7.58)

PLser

1

0.973

0.955

(-2.67)

(-4.53)

PMagr

1.122

1.122

1.122

• industry

PMind

1.312

• services

PMser

1.030

PRICE OF IMPORTS • agriculture

EXTER 2

(0.00)

(0.00)

1.181

1.181

(-10.00)

(-10.00)

1.030

1.030

(0.00)

(0.00)

41

DEFINITIONS

SYMBOL

BENCHMARK

SIM1: tmind -50%

SIM2: tmind -50%

 trE = 3.0

 trE = 0.5

PRODUCER PRICE OF EXPORTED COMMODITY • agriculture

PEagr

1

• industry

PEind

• services

PEser

0.994

0.973

(-0.62)

(-2.70)

1

0.996

0.979

(-0.45)

(-2.08)

1

0.992

0.969

(-0.80)

(-3.15)

1.043

1.022

FOB PRICE OF EXPORTED COMMODIT Y • agriculture

FOB PEagr

1.05

(-0.62)

(-2.70)

0.979

• industry

FOB PEind

1

0.996 (-0.45)

(-2.08)

• services

FOB PEser

1

0.992

0.969

(-0.80)

(-3.15)

8,928.88

8,906.38

P R O D UC TI ON AN D F A CTO R S OUTPUT • agriculture

XSagr

9,000

• industry

XSind

• services • non-tradable services

(-0.79)

(-1.04)

54,400

53,834.85

53,649.31

(-1.04)

(-1.38)

XSser

22,000

22,151.43

22,066.85

(0.69)

(0.30)

XSntr

8,700

8,891.26

9,061.78

(2.20)

(4.16)

VAagr

7,200

7,143.10

7,125.10

• industry

VAind

• services • non-tradable services

VALUE ADDED • agriculture

(-0.79)

(-1.04)

18,900

18,703.65

18,639.19

(-1.04)

(-1.38)

VAser

14,300

14,398.43

14,343.45

(0.69)

(0.30)

VAntr

6,960

7,113.01

7,249.42

(2.20)

(4.16)

LDagr

5,760

5,703.16

5,685.20

• industry

LDind

• services • non-tradable services

LABOUR • agriculture

(-0.99)

(-1.30)

7,560

7,365.18

7,301.88

(-2.58)

(-3.41)

LDser

8,580

8,678.65

8,623.49

(1.15)

(0.51)

LDntr

6,960

7,113.01

7,249.42

(2.20)

(4.16)

LS

28,860

28,860.00

28,860.00

(0.00)

(0.00)

KDagr

1,440

1,440.00

1,440.00

• industry

KDind

• services

• total

CAPITAL • agriculture

(0.00)

(0.00)

11,340

11,340.00

11,340.00

(0.00)

(0.00)

KDser

5,720

5,720.00

5,720.00

(0.00)

(0.00)

CIagr

1,637.16

1,624.22

1,620.13

• industry

CIind

• services • non-tradable services

TOTAL INTERMEDIATE CONSUMPTION • agriculture

42

(-0.79)

(-1.04)

32,280.28

31,944.93

31,834.83

(-1.04)

(-1.38)

CIser

7,073.04

7,121.73

7,094.53

(0.69)

(0.30)

CIntr

1,591.12

1,626.10

1,657.29

(2.20)

(4.16)

FFC-PEP Workshop, August 2010

DEFINITIONS

SYMBOL

BENCHMARK

DIagr,agr

156.08

DIind,agr

SIM1: tmind -50%

SIM2: tmind -50%

 trE = 3.0

 trE = 0.5

INTERMEDIATE CONSUMPT ION • agriculture

• industry

• services

• non-tradable services

154.85

154.46

(-0.79)

(-1.04)

1,349.03

1,338.37

1,335.00

(-0.79)

(-1.04)

DIser,agr

132.04

131.00

130.67

(-0.79)

(-1.04)

DIagr,ind

680.12

673.05

670.73

(-1.04)

(-1.38)

DIind,ind

26,565.21

26,289.23

26,198.63

(-1.04)

(-1.38)

DIser,ind

5,034.95

4,982.64

4,965.47

(-1.04)

(-1.38)

DIagr,ser

172.81

174.00

173.34

(0.69)

(0.30)

DIind,ser

4,896.93

4,930.64

4,911.81

(0.69)

(0.30)

DIser,ser

2,003.30

2,017.09

2,009.39

(0.69)

(0.30)

DIagr,ntr

115.45

117.99

120.25

(2.20)

(4.16)

DIind,ntr

1,198.39

1,224.74

1,248.22

(2.20)

(4.16)

DIser,ntr

277.28

283.38

288.81

(2.20)

(4.16)

28,659.02 (-1.18) 12,726.15 (-2.11) 6,315.26 (-2.47) 8,334.10 (-21.00)

28,087.93 (-3.15) 12,430.23 (-4.38) 6,142.63 (-5.13) 8,167.75 (-22.58)

28,085.84 (-1.18) 12,089.85

27,526.18 (-3.15) 11,808.71

(-2.11)

(-4.38)

145.65

142.50

IN C O M E AN D S AV IN G S INCOME • labour endowed households

YHhw

29,000

• capital endowed households

YHhc

13,000

• firms

YF

6,475

• government

YG

10,549.46

DISPOSABLE INCOME • labour endowed households

YDHhw

28,420

• capital endowed households

YDHhc

12,350

TIagr

152.34

• industrial products

TIind

• services

RECEIPTS FROM INDIRECT TAXATION • agricultural products

(-4.39)

(-6.46)

3,244.22

2,992.22

2,934.64

(-7.77)

(-9.54)

TIser

675

661.95

648.34

(-1.93)

(-3.95)

TIMagr

37.9

TIMind

3,825

TIMser

0

TIEagr

90

DTHhw

580

DTHhc

RECEIPTS FROM DUTIES ON IMPORTS • agricultural products • industrial products • services

35.27

33.89

(-6.95)

(-10.58)

1,935.34

1,907.81

(-49.40)

(-50.12)

0.00

0.00

(0.00)

(0.00)

91.13

88.78

(1.26)

(-1.36)

573.18

561.76

RECEIPTS FROM TAXES ON EXPORTS • agricultural products

RECEIPTS FROM DIRECT TAXATION • labour endowed households • capital endowed households • firms

EXTER 2

DTF

(-1.18)

(-3.15)

650

636.31

621.51

(-2.11)

(-4.38)

1,295

1,263.05

1,228.53

(-2.47)

(-5.13)

43

DEFINITIONS

SYMBOL

BENCHMARK

SIM1: tmind -50%

SIM2: tmind -50%

 trE = 3.0

 trE = 0.5

SAVINGS • labour endowed households

SHhw

2,842

SHhc

• firms • government

• capital endowed households

2,808.58

2,752.62

(-1.18)

(-3.15)

2,470

2,417.97

2,361.74

(-2.11)

(-4.38)

SF

2,910

2,782.21

2,644.11

(-4.39)

(-9.14)

SG

1,709.96

-505.90

-672.25

(-129.59)

(-139.33)

4,222.40

4,213.46

D E M AN D LABOUR ENDOWED HOUSEHOLDS – CONSUMPTION • agriculture

Cagr,hw

4,158.62

• industry

Cind,hw

• services

Cser,hw

(1.53)

(1.32)

10,196.69

10,848.55

10,768.76

(6.39)

(5.61)

9,657.28

9,773.43

9,742.44

(1.20)

(0.88)

606.35

603.01

CAPITAL ENDOWED HOUSE HOLDS – CONSUMPTION • agriculture

Cagr,hc

602.87

• industry

Cind,hc

• services

Cser,hc

Public expenditures

G

(0.58)

(0.02)

3,323.25

3,502.41

3,464.84

(5.39)

(4.26)

5,395.15

5,408.61

5,373.16

(0.25)

(-0.41)

8,700

8,700.00

8,700.00

(0.00)

(0.00)

1,119.89

1,118.78

INTERMEDIATE DEMAND • agricultural products

DITagr

1,124.47

• industrial products

DITind

• services

(-0.41)

(-0.51)

34,009.57

33,782.97

33,693.66

(-0.67)

(-0.93)

DITser

7,447.57

7,414.11

7,394.34

(-0.45)

(-0.72)

INVagr

1,693.05

1,496.06

1,480.73

INVind IT

INVESTMENT DEMAND • agricultural products • industrial products • total

(-11.64)

(-12.54)

14,010.50

12,972.84

12,772.50

(-7.41)

(-8.84)

17,355.46

14,926.86

14,510.21

(-13.99)

(-16.39)

7,094.30

7,081.12

LOCAL OUTPUT SOLD ON DOMESTIC MARKET • agricultural products

Dagr

7,200

• industrial products

Dind

• services

(-1.47)

(-1.65)

46,240

45,559.40

45,397.29

(-1.47)

(-1.82)

Dser

19,800

19,897.65

19,831.18

(0.49)

(0.16)

Qagr

7,579

7,444.71

7,415.98

• industry

Qind

• services

Qser

COMPOSITE COMMODITY • agriculture

(-1.77)

(-2.15)

61,540

61,106.77

60,699.76

(-0.70)

(-1.37)

22,500

22,596.15

22,509.94

(0.43)

(0.04)

352.68

338.89

INTERNATIONAL TRADE IMPORTS • agricultural products

Magr

379

• industrial products

Mind

• services

Mser

44

(-6.95)

(-10.58)

15,300

15,482.75

15,262.46

(1.19)

(-0.25)

2,700

2,698.67

2,679.28

(-0.05)

(-0.77)

FFC-PEP Workshop, August 2010

DEFINITIONS

SYMBOL

BENCHMARK

SIM1: tmind -50%

SIM2: tmind -50%

 trE = 3.0

 trE = 0.5

EXPORTS (SUPPLY=DEMAND) • agricultural products

EXagr

1,800

• industrial products

EXind

• services Current account balance

EXTER 2

1,834.04

1,824.81

(1.89)

(1.38)

8,160

8,269.85

8,246.16

(1.35)

(1.06)

EXser

2,200

2,253.41

2,235.46

(2.43)

(1.61)

CAB

7,424

7,424.00

7,424.00

(0.00)

(0.00)

45

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