Module 7100
Applied Computable General Equilibrium Modelling

Instructors

The course is offered at the International Agricultural Trade and Development Group, Faculty of Life Sciences, Humboldt-Universität zu Berlin, Hannoversche Str. 27, Haus 12. The instructors are:

PD Dr. Khalid Siddig. Tel.: 030 2093 46813, Email: khalid.siddig@hu-berlin.de
Prof. Dr. Harald Grethe. Tel.: 030 2093 46810, Email: grethe@hu-berlin.de
Dr. Jonas Luckmann. Tel.: 030 2093 46811, Email: luckmann@hu-berlin.de

Objectives

Students

gain an overview of various methods for estimating social accounting matrices (SAMs) as databases for computable general equilibrium (CGE) models,
gain an overview on different CGE-specifications and their potential as well as limitations with respect to the research question to be analyzed,
gain hands-on experience adapting standard CGE models and adding extensions needed for their own research-projects,
learn to systemically analyze simulated quantitative results of changes in policies or other drivers with regard e.g. to production, demand, trade, prices, welfare and environmental indicators, drawing on micro-economic theory,
will be able to critically analyze research studies based on CGE model results,
are trained on how to select relevant CGE results for presentation and communication given the huge amount of results produced by CGE models, and
are trained to successfully work in small groups under time pressure.

Course description

This course is designed for advancing the experience of participants with basic knowledge and experience in CGE modelling in GAMS and prepare them for using and adapting state of the art/standard CGE models for own research. It starts by a brief refreshment on the basics of CGE modeling in GAMS and SAM estimation before running real-world experiments in open economy multi-sectoral CGE models.
Acknowledging that CGE models produce comprehensive results, the course dedicates some time to providing hands-on training on how to better analyze and present CGE results. Afterwards, participants will produce and assess results under different model settings considering various assumptions and parametrizations.
After assuring that participants are familiar with designing, running and analyzing experiments in standard CGE models, the course will propose and highlight various options of extending standard CGE models in various dimensions. For the time being, these include:

options of labor mobility and employment,
working with satellite accounts in order to distinguish prices and quantities,
options for modeling quotas and technological change, and
integration of stochastics.

The course is a combination of lectures, PC demonstrations, group work and assignments. During the course, participants will work in subgroups in parallel and prepare a presentation on a selected topic. On the last day of the course, the groups present and discuss their findings with all participants. Instructors will provide feedback and will be available during the group work phases to help with technical problems and/or to answer related questions.

Course schedule and outline

Date	Content
Before the course	Read mandatory background readings, Scan optional readings on various model documentations, GAMS, SAM estimation, etc.
Monday	Introduction to the course, Recap on GAMS and viewing reference files and GDX in GAMS IDE, Brief introduction to simple CGE models in GAMS.
Tuesday	Methods of SAM estimation, Policy simulations using the STAGE model, Reviewing CGE results under various closure rules and assumptions.
Wednesday	Discussion on selected extensions of standard CGE models including (note: these extensions could change every year): options of labor mobility and employment, working with satellite accounts, options for modeling quotas and technological change, integration of stochastics. Elaborative introduction to two selected model extensions, namely: options of labor mobility and employment, options for modeling quotas and technological change. Assigning groups for presentations and distribution of topics in relation to the two selected model extensions
Thursday	Exercises Group work
Friday	Presentations Exams (voluntary; 15 minutes per person)

Teaching methods

Lectures (20%), Student presentations (15%), PC-demonstrations (15%), Hands-on-exercises (50%)

Grading (if desired): Presentations (30%), Assignments (30%), Oral exam (40%)

Credit points: 3

Workload: 40 contact hours during the course; 50 hours of pre- and during course self-study

Requirements

Students should bring their own notebooks with GAMS installed! A free demo-version of GAMS can be downloaded from: https://www.gams.com
Good understanding of intermediate microeconomics,
Basic knowledge of general equilibrium modelling and of the software GAMS. For GAMS, see for example Module 6700 of the Doctoral Certificate Programme. In case you have no background on GAMS and CGE modeling, we can provide pre-course materials, which would require about 60 hours of work in order to qualify for the course.

References (background reading)

If you face difficulties to access any of the background reading materials, please contact the course instructor to receive them by email in pdf format.
On GAMS:

Rosenthal, R. (2016). GAMS - A User’s. GAMS Development Corporation, Washington, DC, USA. https://www.gams.com/latest/docs/UG_MAIN.html

Basic CGE modeling in GAMS:

McDonald, S. (2009). A Two Sector Closed Economy CGE Model. Mimeo.
McDonald, S. (2009). A Basic Two Sector Closed Economy CGE Model. Mimeo.

On SAM estimation and analysis:

Robinson S., Cattaneo, A., El-Said, M. (2000). Updating and Estimating a Social Accounting Matrix Using Cross Entropy Methods. International Food Policy Research Institute. https://ageconsearch.umn.edu/bitstream/16277/1/tm000058.pdf
Breisinger, C., Thomas, M., Thurlow, J. (2010). Social Accounting Matrices and Multiplier Analysis. An Introduction with Exercises. http://www.ifpri.org/publication/social-accounting-matrices-and-multiplier-analysis

On standard CGE modeling in GAMS:

McDonald (2007). A Static Applied General Equilibrium Model: Technical Documentation, STAGE Version 1: July 2007. http://www.cgemod.org.uk/stage.pdf
McDonald (2015). A Static Applied General Equilibrium Model: Technical Documentation, STAGE Version 2: January 2015. http://www.cgemod.org.uk/stage2.pdf

Lofgren, H., Harris, R., Robinson, R. (2002). A standard computable general equilibrium (CGE) model in GAMS. http://www.ifpri.org/publication/standard-computable-general-equilibrium-cge-model-gams-0

On labor mobility and employment:

Agbahey, J., Siddig, K., Grethe, H. (2018). Unemployment meets a mobility function to model cross-border movements of labor between Palestine and Israel. GTAP 2018 conference paper. https://www.gtap.agecon.purdue.edu/resources/download/8839.pdf
Flaig, D., Siddig, K., Grethe, H., Luckmann, J., McDonald, S. (2013). Relaxing Israeli restrictions on Palestinian labour: Who benefits? Economic Modelling, 31 (1), pp. 143-150, doi: 10.1016/j.econmod.2012.11.052

On water-focused CGEs with satellite accounts for water:

Luckmann, J., Grethe, H., McDonald, S., Orlov, A. and K. Siddig (2014). An integrated economic model of multiple types and uses of water. Water Resources Research 50: 3875–3892, doi: 10.1002/2013WR014750.
Luckmann, J., McDonald, S. (2014). STAGE_W: An Applied General Equilibrium Model with Multiple Types of Water - Technical Documentation. https://ageconsearch.umn.edu/record/234473?ln=en

On tariff-rate quotas in CGE models:

Agbahey, J., Siddig, K., Grethe, H., Luckman, J. (2018). Trade policy in a sovereign Palestinian State: what are the options in a final settlement? ERF annual conference. http://erf.org.eg/wp-content/uploads/2018/02/Agbahey_-Grethe-Luckmann.pdf

Module 7100 Applied Computable General Equilibrium Modelling