A Standard Computable General Equilibrium (CGE) Model in GAMS
The standard computable general equilibrium (CGE) model is a static single country model documented in an IFPRI Technical Guide that discusses the implementation of the model in GAMS (General Algebraic Modeling System). The guide is accompanied by a CD-ROM that includes the GAMS input files for the model, sample databases, simulations, solution reports, and a social accounting matrix (SAM) aggregation program. Although the guide provides a standardized framework for analysis, the analyst is not forced to make “one-size-fits-all” assumptions. The GAMS code is written to give the analyst considerable flexibility in model specification.
The model is written for application at the country level; however, only minimal changes are needed before it can be applied to a region within a country (such as a village) or to a farm household involved in production and consumption activities. The model incorporates features of particular importance in developing countries including household consumption of non-marketed (“home”) commodities, explicit treatment of transaction costs for commodities that enter the market sphere, and a separation between production activities and commodities that permits any activity to produce multiple commodities and any commodity to be produced by multiple activities.
Computable general equilibrium (CGE) models are used widely in policy analysis. The purpose of this guide is to contribute to and facilitate the use of CGE models. The paper includes a detailed presentation of a “standard” CGE model (an equation-by-equation description) and its required database. It incorporates features developed in recent years in research projects conducted at IFPRI.
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