21th WEM - Computable General Equilibrium Analysis of Trade and Climate Policies using GTAPinGAMS and MPSGE

Department of Applied Economic Analysis at the University of Las Palmas de G.C. (Canary Islands, Spain), 17th – 21st February 2025

Instructors:

Prof. Edward J. Balistreri

Prof. Christoph Böhringer

Ass. Prof. Casiano Manrique

Responses to global challenges such as climate change, international trade conflicts, or disruptions in global supply chains should be based on the systematic impact assessment of alternative policy options. The economic analysis of policies affecting markets in multiple countries requires both data and theory. We provide computational tools developed in the GAMS modeling language to extract the GTAP data base of the global economy. We use empirical GTAP data for computable general equilibrium (CGE) analysis facilitated by MPSGE as a meta-language to implement CGE models in a compact non-algebraic manner. The workshop will demonstrate the practical usefulness of CGE analysis by means of policy-relevant applications to carbon tariffs in climate policy, disruptive trade policies, and supply chain shocks.

The explicit algebraic formulation of general equilibrium conditions and the parameterization of functional forms to characterize technologies and preferences can become very tedious and error-prone in particular for more complex production and consumption patterns. MPSGE (Mathematical Programming System for General Equilibrium) provides a short-hand non-algebraic representation for general equilibrium models releasing economists from the need to write down complicated equilibrium conditions explicitly as well as from the need to set up tedious calibration routines for the parameterization of demand and supply functions. The workshop will show in detail how to transform algebraic CGE models into non-algebraic MPSGE syntax which can substantially lower the entry barriers and time cost of CGE analysis n both – algebraic and non-algebraic – cases, CGE models are stated as mixed complementarity problems (MCP) which link equilibrium conditions as nonlinear inequalities with complementary non-negative economic variables. The fundamental strength of CGE models implemented as MCP is the ability to handle corner solutions and regime shifts that might be central to the analysis of discrete production decisions (e.g. firm location) or the selection of international value chains (e.g. switching of trade links).

The workshop will consist of five segments:

Part 1: Economic Equilibrium and Mixed Complementarity Problems (MCP)

Part 2: Data management using GTAPinGAMS and data-driven analysis:

Part 3: Standard CGE trade models for policy analysis

Part 4: Advanced trade structures and large-scale applications

Part 5: Advanced trade policy applications and exercises

(Carbon tariffs, optimal tariffs and trade wars, structural sensitivity in an empirical model, decomposition strategies for Melitz computation, structural estimation and gravity-The final list of topics to be discussed will depend on the preferences of the participants and the availability of time)

Enrollment is limited to 20 participants to assure efficient, close interaction. For further information please check:

http://www.ulpgc.es/webs/wem/

The registration deadline is February, 15, 2025.