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Computable General Equilibrium Modeling for Regional Analysis


Eliécer E. Vargas
Tropical Agricultural Research and Higher Education Center
CATIE 7170
Turrialba, Costa Rica
Office: (506) 558-2218
Fax: (506) 556-8514
e-mail: evargas@catie.ac.cr

Gelson Tembo
Agricultural Economist
Policy and Planning Division
Ministry of Agriculture, Food & Fisheries
Lusaka, Zambia and
MSU/USAID Food Security Research Project
86 Provident Street, Rhodes Park
Lusaka, ZAMBIA
e-mail: tembogel@msu.edu

Dean F. Schreiner
Department of Agricultural Economics
Oklahoma State University Mall

David W. Marcouiller
Department of Urban and Regional Planning
Old Music Hall, 925 Bacom Mall
University of Wisconsin
Madison, WI 53706
Tele: (608) 262-2998
e-mail: dave@macc.wisc.edu

Table of Contents

1.0 Introduction
1.1 Introduction
1.2 General equilibrium economic models
2.0 Overview of CGE analysis
2.1 CGE analysis at national and regional levels
2.2 Data and data organization
2.2.1 Social accounting matrices
What is a SAM?
How are SAM's useful for policy analysis?
How is a regional/state SAM constructed?
2.2.2 Using IMPLAN to construct a SAM
The aggregate SAM for Oklahoma
2.3 Determining parameter values
3.0 A Competitive Regional CGE Model
3.1 Production system
3.1.1 Composite value-added and intermediate inputs
3.1.2. Substitution among primary factors of production
Primary inputs and their demands
Intermediate inputs and their demands
3.1.3 Substitution among types of factor inputs
3.1.4 Net output price
3.2 Commodity markets
3.2.1 Market outlets for regional output
3.2.2. Commodity consumption by households
Household commodity demand systems
Commodity substitution of imports for domestic product
3.2.3 Institutional markets
3.2.4 Commodity prices
Composite purchase price
Composite output price
3.2.5 Commodity market equilibrium
3.3 Factor markets and factor incomes
3.3.1 The labor market
Labor income
3.3.2 The capital market
Capital income
3.3.3 The land market
3.3.4 Enterprise income
3.3.5 Household income
Regional households
Labor out-migration households
Labor in-migration households
3.4 Measures of regional and household welfare
3.4.1 Regional welfare
Regional expenditure
Regional price level
Net government revenue
Other regional measures of welfare
3.4.2 Household welfare
Household income
Compensating and equivalent variaton
4.0 Model Execution
4.1 Competitive CGE model equations
4.2 GAMS solution
4.3 Model construction in GAMS
4.4 Model simulation
5.0 Increasing Returns and Imperfect Competition in Regional CGE Modeling
5.1 Increasing returns, non-convexity, and competitive CGE models
5.2 Modeling increasing returns and imperfect competition
5.2.1 Increasing returns – the dual approach
5.2.2 Increasing returns – the primal approach
5.2.3 Market power
Contestable pricing
From monopoly to oligopoly
5.3 Calibration
6.0 Policy Applications and Summary and Conclusions
6.1 Policy application
6.1.1 Agricultural export prices
6.1.2 Sport fishing trip demand
6.2 Summary and conclusions
List of Tables and Figures
2.1 Aggregated Social Accounting Matrix (SAM) for Oklahoma,
1993 ($1,000)
or pdf file of Table 2.1 and Tables 2-6
3.1 Elasticities of Import Substitution
3.2 Elasticities of Transformation
4.1 Competitive CGE Model Equations
4.2 Subscript Notation
4.3 Summary of Endogenous Variables
4.4 Summary of Exogenous Variables
4.5 Summary of Parameters
4.6 Effects of a 5% Change in Terms of Trade, Oklahoma, 1993
Figure 2.1. An Illustrative Social Accounting Matrix
List of acronyms
Glossary of Terms
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