Publisher
AGRODEP
The dynamic Senegalese model described below has been developed based on the dynamic Exter-DS model of Annabi, Cockburn and Decaluwé (2004). A number of features have been added to the Exter-DS model: the endogenous growth of total factor productivity, the inclusion of public capital and land factors, and an export demand function. These new characteristics required some adjustment to the existing equation and the addition of a new one.
The model is designed as a set of simultaneous linear and non-linear equations, which define economic agents’ behavior, as well as the economic environment in which these agents operate. This environment is represented by market equilibrium conditions, macroeconomic balances, and dynamic updating equations.
The model belongs to the recursive dynamic strand of the dynamic CGE literature, which implies that its agents’ behavior is based on adaptive projections rather than on the forward-looking projections that underlie alternative inter-temporal optimization models. Since a recursive model is treated one period at a time, it is possible to separate the within-period component from the between-period component, where the latter dictates the model’s dynamics.
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http://www.agrodep.org/sites/default/files/2012_SC_JCabral.pdf