finmge.gms : A General Equilibrium Model for Finland

Description

GEMFIN VERSION 3.0

The purpose of this model is to investigate the effects of the so called
'Consistent Tax Reform' for Finland in a simple general equilibrium structure.


Reference

  • Torma, H, and Rutherford, T F, A General Equilibrium Assessment of Finland's grand Tax Reform. Tech. rep., Department of Economics and Management, University of Jyvaskyla, 1992.

Large Model of Types : MPSGE mcp


Category : GAMS Model library


Main file : finmge.gms

$title A General Equilibrium Model for Finland (FINMGE,SEQ=145)

$onText
GEMFIN VERSION 3.0

The purpose of this model is to investigate the effects of the so called
'Consistent Tax Reform' for Finland in a simple general equilibrium structure.


Torma, H, and Rutherford, T F, A General Equilibrium Assessment of
Finland's grand Tax Reform. Tech. rep., Department of Economics and
Management, University of Jyvaskyla, 1992.

"A General Equilibrium Assessment of Finland's Grand Tax Reform"
Working paper 15/1992, Department of Economics and Management,
University of Jyvaskyla, Finland  ISBN 951-680-793-3, ISSBN 0357-5675
September, 1992


General features of the model:
    5 income classes represented by 5 households
    8 basic consumption goods
    1 state government consumption aggregate
    1 local government consumption aggregate
    2 investment goods (private and government)
   19 sectoral commodities
    2 primary factors (labor and capital)

The foreign sector is represented through non-competing imports
and fixed terms of trade for exports.

Marginal tax rate schedules are represented by linear
approximations to the benchmark rates.  Adjustments which
produce benchmark average tax rates are made using utility
indices.

Households differ in terms of both the composition of factor
ownership and preferences.

When marginal tax rates are modified, the level of government
expenditure is maintained at benchmark levels through
adjustments in consumption sales taxes.  We use multiplicative
replacement (benchmark rates are increased proportionally)
in this run.

Keywords: mixed complementarity problem, general equilibrium model, tax policy,
          social accounting matrix, GAMS - MPSGE framework
$offText

Set
   SC      'scenarios'  / BENCH, GTR-S, GTR-L, CTR-S, CTR-L /
   H       'households' / KVIN1, KVIN2, KVIN3, KVIN4, KVIN5 /
   ACC     'row and column entries in the social accounting matrix'
           / MAAT,      METS,      KAIV,      ELINT,     TVNK,    PUUT
             PAP,       KEM,       METV,      METUK,     MUUTE,   SKV
             TRAK,      MVRAK,     KAUP,      LIIK,      RAKLP,   AHV
             YHP,       EJT,       VAJA,      ASUM,      KTK,     TERV
             LIIKK,     VKK,       MTP,       LABOR,     CAPITAL, EXCHANGE
             EXPORTS,   L-TAX,     K-TAX,     DUTY,      OTH-TAX, LOCINCTAX
             LOCINCSUB, STAINCTAX, STAINCSUB, STATEHELP, PRVINV,  GOVINV
             LOCCON,    STACON,    LOCAL,     STATE,     PRIVATE, ADJUST    /
   C(ACC)  'commodities (sectoral + consumption + investment)'
           / EJT,  VAJA, ASUM,   KTK,    TERV,   LIIKK, VKK
             MTP,  MAAT, METS,   KAIV,   ELINT,  TVNK
             PUUT, PAP,  KEM,    METV,   METUK,  MUUTE
             SKV,  TRAK, MVRAK,  KAUP,   LIIK,   RAKLP
             AHV,  YHP,  PRVINV, GOVINV, LOCCON, STACON     /
   G(C)    'final consumption goods'
           / EJT, VAJA, ASUM, KTK, TERV, LIIKK, VKK, MTP /
   S(C)    'production sectors'
           / MAAT,  METS, KAIV, ELINT, TVNK, PUUT, PAP,   KEM, METV, METUK
             MUUTE, SKV,  TRAK, MVRAK, KAUP, LIIK, RAKLP, AHV, YHP         /
   F(ACC)  'primary factors'
           / LABOR, CAPITAL /
   T(ACC)  'taxes'
           / L-TAX, K-TAX, DUTY, OTH-TAX, LOCINCTAX, LOCINCSUB, STAINCTAX, STAINCSUB /
   PT(T)   'production taxes'
           / L-TAX, K-TAX, DUTY, OTH-TAX /
   HT(T)   'household taxes'
           / STAINCTAX, LOCINCTAX, STAINCSUB, LOCINCSUB /
   BMK(SC) / BENCH /;

Alias (ROWS, ACC), (COLS, ACC), (G,GG), (S,SS);

* TIME-FRAME OF THE ANALYSIS SPECIFIED HERE:
Parameter
    SHORT 'flag for short-run'
    SHORTRUN(SC) / BENCH 0, GTR-S 1, CTR-S 1, GTR-L 0, CTR-L 0 /;

Table ATR(SC,*,H) 'average income tax rates (%) benchmark and counterfactual'
               KVIN1  KVIN2  KVIN3  KVIN4  KVIN5
   BENCH.STA     9.8   10.6   10.3    9.9   11.3
   BENCH.LOC    10.6   11.5   11.1   10.8   12.3
   GTR-S.STA     9.8   10.6   10.3    9.9   11.3
   GTR-S.LOC    10.6   11.5   11.1   10.8   12.3
   GTR-L.STA     9.8   10.6   10.3    9.9   11.3
   GTR-L.LOC    10.6   11.5   11.1   10.8   12.3
   CTR-S.STA     9.8   10.6   10.3    9.9   11.3
   CTR-S.LOC    10.6   11.5   11.1   10.8   12.3
   CTR-L.STA     9.8   10.6   10.3    9.9   11.3
   CTR-L.LOC    10.6   11.5   11.1   10.8   12.3;

Table MTR(SC,H) 'marginal tax rates - benchmark and counterfactual'
           KVIN1  KVIN2  KVIN3  KVIN4  KVIN5
   BENCH    33.7   44.4   47.9   49.0   56.9
   GTR-S    29.1   40.0   43.0   47.1   51.9
   CTR-S    28.7   39.4   42.9   44.0   51.9
   GTR-L    29.1   40.0   43.0   47.1   51.9
   CTR-L    28.7   39.4   42.9   44.0   51.9;

Table KTS(SC,C) 'capital tax scaling factor (representing avoir fiscal)'
           MAAT   METS  KAIV  ELINT  TVNK  PUUT   PAP   KEM
   BENCH   1.00   1.00  1.00   1.00  1.00  1.00  1.00  1.00
   GTR-S   1.00   1.00  0.03   0.17  0.00  0.03  0.25  0.21
   CTR-S   1.00   1.00  1.00   1.00  1.00  1.00  1.00  1.00
   GTR-L   1.00   1.00  0.03   0.17  0.00  0.03  0.25  0.21
   CTR-L   1.00   1.00  1.00   1.00  1.00  1.00  1.00  1.00

   +       METV  METUK  MUUTE   SKV  TRAK  MVRAK  KAUP  LIIK
   BENCH   1.00   1.00   1.00  1.00  1.00   1.00  1.00  1.00
   GTR-S   0.15   0.19   0.00  0.06  0.13   0.20  0.09  0.32
   CTR-S   1.00   1.00   1.00  1.00  1.00   1.00  1.00  1.00
   GTR-L   0.15   0.19   0.00  0.06  0.13   0.20  0.09  0.32
   CTR-L   1.00   1.00   1.00  1.00  1.00   1.00  1.00  1.00;

Table OTS(SC,C) 'output tax scaling factor (exemption)'
           PRVINV  GOVINV   SKV  TRAK  MVRAK  KAUP  LIIK  RAKLP   AHV   YHP
   CTR-S       -1      -1  0.15  0.15   0.15  0.15  0.15   0.15  0.15  0.15
   CTR-L       -1      -1  0.15  0.15   0.15  0.15  0.15   0.15  0.15  0.15;

OTS(SC,C) = OTS(SC,C) + 1;

Parameter TRANSFER(*,H);

Table TRANSF(SC,*,H) 'transfers associated with tax reform (state)'
                KVIN1   KVIN2   KVIN3   KVIN4   KVIN5
   GTR-S.STA   -0.325  -0.681  -1.063  -1.489  -1.963
   GTR-S.LOC   -0.004  -0.017  -0.072  -0.127  -0.158
   GTR-L.STA   -0.325  -0.681  -1.063  -1.489  -1.963
   GTR-L.LOC   -0.004  -0.017  -0.072  -0.127  -0.158
   CTR-S.STA    0.325    .681   1.063   1.489   1.963
   CTR-S.LOC
   CTR-L.STA    0.250   0.500   0.750   0.750   2.500
   CTR-L.LOC                                         ;

Table ESUBP(*,*) 'elasticities of substitution in production'
           ESUBM  ETRNX  ESUBKL
   MAAT      2.0    2.0   0.581
   METS      2.0    2.0   1.126
   KAIV      2.0    2.0   0.741
   ELINT     2.0    2.0   0.756
   TVNK      2.0    2.0   0.994
   PUUT      2.0    2.0   0.769
   PAP       2.0    2.0   0.769
   KEM       2.0    2.0   1.101
   METV      2.0    2.0   1.115
   METUK     2.0    2.0   1.040
   MUUTE     2.0    2.0   0.916
   SKV       2.0    1.5   0.738
   TRAK      2.0    1.5   0.906
   MVRAK     2.0    1.5   0.611
   KAUP      2.0    1.5   0.757
   LIIK      2.0    1.5   0.905
   RAKLP     2.0    1.5   0.338
   AHV       2.0    1.5   0.971
   YHP       2.0    1.5   0.348
   EJT       2.0          1.0
   VAJA      2.0          1.0
   ASUM      2.0          1.0
   KTK       2.0          1.0
   TERV      2.0          1.0
   LIIKK     2.0          1.0
   VKK       2.0          1.0
   MTP       2.0          1.0  ;

* ESUBM:  Armington elasticity : import-domestic.
* ETRNX:  Domestic-export transformation elasticity,
* ESUBKL: Primary factor substitution elasticity.

Table ESUBC(*,*) 'elasticities in consumption'
           ESUBS  ESUBL  SIGMA
   KVIN1    1.18      1    0.3
   KVIN2    1.18      1    0.3
   KVIN3    1.18      1    0.3
   KVIN4    1.18      1    0.3
   KVIN5    1.19      1    0.3;

* ESUBS  Total consumption-savings elasticity.
* ESUBL  Consumption-leisure elasticity.
* SIGMA  Intra-commodity elasticity.

Table SAM(ROWS,COLS) 'benchmark sectoral accounts'
                  MAAT    METS    KAIV    ELINT    TVNK    PUUT      PAP      KEM
   MAAT         -1.305  -0.081          -16.026  -0.030                    -0.004
   METS         -0.153  -0.053           -0.036          -4.561   -4.557   -0.001
   KAIV         -0.116          -0.061   -0.018          -0.001   -0.113   -0.251
   ELINT        -3.289          -0.003  -12.782  -0.159  -0.009   -0.050   -0.147
   TVNK         -0.038          -0.004   -0.023  -2.514  -0.010   -0.057   -0.064
   PUUT                         -0.004   -0.015  -0.005  -1.476   -1.208   -0.050
   PAP          -0.004  -0.006  -0.011   -0.723  -0.094  -0.068  -10.531   -0.507
   KEM          -1.922  -0.212  -0.085   -0.876  -0.281  -0.407   -1.571   -4.079
   METV                         -0.015   -0.073  -0.034  -0.078   -0.105   -0.077
   METUK        -0.451  -0.082  -0.075   -0.345  -0.067  -0.374   -0.995   -0.453
   MUUTE        -0.093  -0.007  -0.038   -0.370  -0.143  -0.189   -0.221   -0.358
   SKV          -0.299  -0.003  -0.140   -0.471  -0.137  -0.437   -4.496   -1.027
   TRAK         -0.260  -0.013  -0.008   -0.062  -0.024  -0.028   -0.083   -0.067
   MVRAK        -0.017  -0.046           -0.007          -0.002   -0.033   -0.014
   KAUP         -1.306  -0.112  -0.055   -0.674  -0.129  -0.106   -0.317   -0.504
   LIIK         -0.228  -0.021  -0.127   -1.205  -0.106  -0.680   -1.380   -0.716
   RAKLP        -0.243  -0.019  -0.207   -1.167  -0.288  -0.343   -0.625   -0.798
   AHV
   YHP          -0.246  -0.101  -0.023   -0.157  -0.043  -0.061   -0.172   -0.129
   LABOR        -1.377  -2.237  -0.557   -4.132  -3.036  -2.317   -4.043   -3.117
   CAPITAL     -13.292  -8.278  -0.512   -3.199  -1.473  -0.532   -4.493   -4.388
   EXCHANGE     -0.838  -0.164  -0.219   -4.044  -2.597  -0.423   -2.472  -17.434
   L-TAX        -0.283  -0.453  -0.128   -0.956  -0.626  -0.514   -0.967   -0.759
   K-TAX                        -0.012   -0.256  -0.083  -0.119   -0.223   -0.141
   DUTY         -0.014  -0.002  -0.006   -0.127  -0.037  -0.002   -0.008   -0.023
   OTH-TAX       0.629  -0.042  -0.037    5.429  -0.019  -0.113   -0.445   -0.404

   +              METV   METUK   MUUTE      SKV    TRAK   MVRAK     KAUP     LIIK
   MAAT                                                           -0.380   -0.023
   METS         -0.003          -0.024   -0.080  -0.173  -0.022   -0.029   -0.002
   KAIV         -0.762  -0.011  -0.226   -0.518  -0.014  -0.033
   ELINT        -0.005  -0.025  -0.011   -0.027  -0.002           -1.962   -0.099
   TVNK         -0.014  -0.097  -0.151   -0.015  -0.060           -0.028   -0.036
   PUUT         -0.026  -0.238  -0.584   -0.361  -2.903  -0.130            -0.008
   PAP          -0.017  -0.184  -1.819   -0.035  -0.196  -0.015   -0.142   -0.070
   KEM          -0.351  -1.127  -0.703   -1.012  -1.427  -1.175   -0.528   -2.224
   METV         -6.955  -4.440  -0.329   -0.042  -0.408  -0.162            -0.003
   METUK        -0.193  -8.368  -0.754   -0.368  -3.649  -1.172   -0.189   -1.321
   MUUTE        -0.144  -0.507  -3.509   -0.197  -4.210  -0.394   -0.709   -0.383
   SKV          -0.609  -0.664  -0.330  -11.614  -0.121  -0.052   -0.871   -0.309
   TRAK         -0.059  -0.207  -0.077   -0.034  -0.051  -0.074   -0.233   -0.244
   MVRAK        -0.012  -0.039  -0.001   -0.127                   -0.004   -0.986
   KAUP         -0.190  -0.861  -0.291   -0.611  -2.681  -0.428   -1.651   -1.030
   LIIK         -0.381  -0.618  -1.766   -0.619  -1.737  -1.657   -4.920   -1.367
   RAKLP        -0.356  -2.318  -1.312   -0.724  -2.040  -0.562   -7.579   -1.510
   AHV
   YHP          -0.051  -0.293  -0.409   -0.135  -0.109  -0.033   -0.658   -1.189
   LABOR        -1.600 -13.603  -5.987   -2.440 -10.762  -3.338  -21.195  -10.337
   CAPITAL      -0.845  -7.651  -3.857   -5.477  -3.667  -1.557   -6.825  -10.445
   EXCHANGE     -2.878  -9.242  -1.743   -3.266  -2.873  -0.909   -1.734   -4.178
   L-TAX        -0.483  -3.029  -1.270   -0.636  -2.462  -0.787   -4.659   -2.276
   K-TAX        -0.063  -0.417  -0.175   -0.237  -0.128  -0.012   -2.046   -0.072
   DUTY         -0.006  -0.106  -0.020   -0.003  -0.094  -0.022   -0.016   -0.035
   OTH-TAX      -0.149  -0.408   0.174   -1.424  -3.316  -0.731   -2.616   -1.068

   +             RAKLP     AHV     YHP
   MAAT
   METS                 -0.003  -0.004
   KAIV
   ELINT        -0.018          -0.008
   TVNK         -0.006          -0.029
   PUUT         -0.012          -0.027
   PAP          -0.189  -0.015  -0.034
   KEM          -1.410  -0.903  -0.292
   METV                         -0.003
   METUK        -0.195  -0.006  -0.236
   MUUTE        -2.371  -0.018  -0.601
   SKV          -1.324  -2.067  -0.096
   TRAK         -0.358  -2.081  -0.068
   MVRAK
   KAUP         -1.591  -0.524  -0.488
   LIIK         -2.144  -0.168  -0.454
   RAKLP       -12.759  -0.670  -1.786
   AHV
   YHP          -2.138  -0.860  -0.379
   LABOR       -11.768          -5.142
   CAPITAL      -7.430 -19.158  -5.198
   EXCHANGE     -1.494  -0.441  -1.448
   L-TAX        -2.642          -1.059
   DUTY         -0.026          -0.031
   OTH-TAX      -0.620  -0.330  -0.209

   +               EJT    VAJA    ASUM     KTK    TERV   LIIKK      VKK      MTP
   MAAT         -2.941                                           -0.767   -0.019
   METS         -0.301          -0.590                                    -0.001
   KAIV
   ELINT       -17.880                                           -0.075   -0.370
   TVNK                  -2.300          -0.279  -0.001          -0.076   -0.194
   PUUT                                  -0.042                           -0.013
   PAP                                   -0.110                           -0.288
   KEM                   -0.119  -0.600  -0.596  -0.734  -1.799  -0.266   -0.413
   METV
   METUK                                 -0.844  -0.103  -1.059  -0.727   -0.083
   MUUTE                                 -1.393  -0.003  -0.031  -2.804   -0.385
   SKV                           -3.208                                   -0.118
   TRAK                          -0.002                                   -0.066
   MVRAK                                                                  -0.096
   KAUP          -8.183  -3.128  -0.906  -2.837  -1.473  -5.995  -2.586  -12.970
   LIIK                                                  -8.603           -1.080
   RAKLP                                 -0.523  -0.430  -1.004           -4.005
   AHV                          -27.185                  -0.184
   YHP                   -0.079          -0.974  -2.383  -3.188  -4.594   -0.985
   LABOR         -0.994  -0.191  -1.102  -0.258  -0.174  -0.742  -0.403   -0.715
   CAPITAL       -0.097  -0.019  -0.108  -0.025  -0.017  -0.072  -0.039   -0.070
   EXCHANGE      -1.713  -2.570  -0.245  -2.652  -0.542  -3.340  -2.777   -0.873
   L-TAX         -0.221  -0.043  -0.245  -0.058  -0.039  -0.166  -0.090   -0.160
   DUTY          -0.080  -0.120  -0.011  -0.123  -0.025  -0.156  -0.129   -0.041
   OTH-TAX      -14.081  -1.587  -0.123  -1.685  -0.492  -6.164  -2.614   -1.158

   +            EXPORTS   PRVINV  GOVINV
   MAAT          -2.794
   METS          -0.261   -0.001
   KAIV          -0.299
   ELINT         -4.055
   TVNK          -5.170   -0.080  -0.005
   PUUT          -5.756   -0.003  -0.001
   PAP          -23.529
   KEM           -9.227   -0.031  -0.001
   METV          -5.697
   METUK        -24.832   -5.472  -0.266
   MUUTE         -2.693   -0.141  -0.008
   SKV           -0.115
   TRAK          -0.012  -33.166  -5.396
   MVRAK                  -5.904  -3.489
   KAUP          -2.347   -3.310  -0.190
   LIIK          -6.490   -0.637  -0.035
   RAKLP         -2.879   -0.816  -0.044
   YHP           -0.309
   EXCHANGE      93.428  -18.805  -0.917
   DUTY                   -0.216  -0.012
   OTH-TAX        3.037   -4.447  -0.257

   +             LOCCON   STACON   LOCAL    STATE
   MAAT          -0.044
   METS          -0.011
   KAIV          -0.000   -0.011
   ELINT         -1.089   -0.174
   TVNK          -0.049   -0.175
   PUUT          -0.114   -0.039
   PAP           -0.238   -0.111
   KEM           -1.774   -0.569
   METV          -0.005   -0.002
   METUK         -0.164   -0.391
   MUUTE         -0.004   -0.638
   SKV           -1.056   -0.356
   TRAK          -0.440   -0.127
   MVRAK         -1.224   -0.951
   KAUP          -1.524   -0.479
   LIIK          -1.304   -0.210
   RAKLP         -0.963   -2.070
   AHV
   YHP                    -0.670
   LABOR        -25.770  -11.161
   CAPITAL       -2.369   -1.177
   EXCHANGE      -1.266   -1.539
   L-TAX         -7.063   -2.539           34.613
   K-TAX                                    3.984
   DUTY          -0.034   -0.015            1.540
   OTH-TAX       -1.372   -0.394           37.041
   STAINCTAX                               27.945
   LOCINCTAX                      30.302
   STAINCSUB                              -40.544
   LOCINCSUB                      -8.477
   STATEHELP                      31.454  -31.454
   LOCCON                        -48.940
   STACON                                 -22.152
   GOVINV                         -4.339   -6.282
   ADJUST                                  -4.691

   +          PRIVATE  ADJUST
   MAAT                -0.732
   METS                -1.066
   KAIV                 0.107
   ELINT               -0.075
   TVNK                -0.450
   PUUT                 0.165
   PAP                 -0.219
   KEM                  0.647
   METV                 2.276
   METUK               -1.219
   MUUTE               -2.649
   SKV                 -0.082
   TRAK                 0.157
   MVRAK               -0.313
   KAUP                 0.503
   LIIK                -0.563
   RAKLP               -0.455
   AHV                  0.125
   YHP                  2.776
   EJT        -46.491
   VAJA       -10.156
   ASUM       -34.330
   KTK        -12.399
   TERV        -6.416
   LIIKK      -32.503
   VKK        -17.947
   MTP        -24.103
   LABOR      150.138  -1.640
   CAPITAL    111.580   0.690
   EXCHANGE             2.658
   STAINCTAX  -27.945
   LOCINCTAX  -30.302
   STAINCSUB   40.544
   LOCINCSUB    8.477
   PRVINV     -73.029
   ADJUST       4.882  -0.191;

Table DEMAND(*,H) 'income and expenditure data'
                KVIN1    KVIN2    KVIN3    KVIN4    KVIN5
   EJT         -4.031   -5.926   -8.463  -10.989  -17.082
   VAJA        -0.880   -1.295   -1.849   -2.401   -3.731
   ASUM        -2.976   -4.376   -6.250   -8.114  -12.614
   KTK         -1.075   -1.580   -2.257   -2.931   -4.556
   TERV        -0.556   -0.818   -1.168   -1.517   -2.357
   LIIKK       -2.818   -4.143   -5.917   -7.683  -11.942
   VKK         -1.556   -2.288   -3.267   -4.242   -6.594
   MTP         -2.090   -3.072   -4.388   -5.697   -8.856
   LABOR        3.878   14.338   25.055   40.818   66.049
   CAPITAL      5.484   11.028   17.485   25.291   52.292
   PRVINV      -6.331   -9.308  -13.294  -17.261  -26.835
   LEISURE     -8.947  -22.711  -37.056  -58.411  -93.261
   STAINCTAX   -0.918   -2.694   -4.369   -6.564  -13.400
   LOCINCTAX   -0.996   -2.921   -4.738   -7.117  -14.530
   STAINCSUB    8.540    8.239    9.067    7.110    7.588
   LOCINCSUB    1.786    1.723    1.896    1.487    1.585;

* DETERMINE SECTORAL LEVELS:
Parameter YB(C) 'supply levels';

SAM(ROWS,"ADJUST") =  0;
SAM("ADJUST",COLS) =  0;
YB(C)              = -sum(ROWS, SAM(ROWS,C));
SAM(ROWS,"ADJUST") = -sum(COLS, SAM(ROWS,COLS));
SAM(C,"ADJUST")    =  SAM(C,"ADJUST") - YB(C);
SAM("ADJUST",COLS) = -sum(ROWS, SAM(ROWS,COLS));
SAM("ADJUST",C)    =  SAM("ADJUST",C) - YB(C);

display SAM;

* YB(C) = -sum(COLS, SAM(C,COLS));

* CHECK CONSISTENCY OF SOCIAL ACCOUNT DATA:
Parameter
   ROWSUM(ROWS) 'check sums of rows in SAM'
   COLSUM(COLS) 'check sums of columns in SAM';

ROWSUM(ROWS) = sum(COLS, SAM(ROWS,COLS));
COLSUM(COLS) = sum(ROWS, SAM(ROWS,COLS));
ROWSUM(C)    = ROWSUM(C) + YB(C);
COLSUM(C)    = COLSUM(C) + YB(C);

abort$(smax(ROWS, abs(ROWSUM(ROWS))) > 1.E-4) " ROWS IN SAM DO NOT BALANCE",    ROWSUM, COLSUM;
abort$(smax(COLS, abs(COLSUM(COLS))) > 1.E-4) " COLUMNS IN SAM DO NOT BALANCE", ROWSUM, COLSUM;

* CHECK JOINT CONSISTENCY OF SAM AND DEMAND DATA:
Parameter ENDOWCHK(F) 'consistency check of household endowments';
ENDOWCHK(F) = sum(H, DEMAND(F,H)) - SAM(F,"PRIVATE");
abort$(smax(F, abs(ENDOWCHK(F))) > 1.E-4) "ENDOWMENTS ARE INCONSISTENT:", ENDOWCHK;

Parameter TAXCHK(HT) 'consistency of household taxes';
TAXCHK(HT) = sum(H, DEMAND(HT,H)) - SAM(HT,"PRIVATE");
abort$(smax(HT, abs(TAXCHK(HT))) > 1.E-4) "INCOME TAX/SUBSIDY DATA INCONSISTENT WITH SAM:", TAXCHK;

Parameter CONCHK(G) 'consistency check of household demand';
CONCHK(G) = sum(H, -DEMAND(G,H)) + SAM(G,"PRIVATE");
abort$(smax(G, abs(CONCHK(G))) > 1.E-4) "CONSUMPTION DATA INCONSISTENT WITH SAM:", CONCHK;

Scalar INVCHK 'consistency check of household investment';
INVCHK = sum(H, -DEMAND("PRVINV",H)) + SAM("PRVINV","PRIVATE");
abort$(INVCHK > 1.E-4) "INVESTMENT DATA INCONSISTENT WITH SAM:", INVCHK;

* CALIBRATE TO SPECIFIED AVERAGE AND MARGINAL TAX RATES:
Parameter
   TAVE(*,H) 'average income tax rate'
   TMRG(H)   'marginal income tax rate'
   TBMK(H)   'benchmark marginal tax rate'
   WALADJ(H) 'adjustment to balance income-expenditure'
   WB(H)     'benchmark welfare';

* PROVIDE A COMPARISON WITH THE BENCHMARK DATA
Parameter INCTAX(*,H) 'social accounting matrix versus benchmark (%)';

INCTAX("SAM",H)   = -100*(DEMAND("STAINCTAX",H) + DEMAND("LOCINCTAX",H))/sum(F, DEMAND(F,H));
INCTAX("BENCH",H) = ATR("BENCH","STA",H) + ATR("BENCH","LOC",H);
TAVE("STATE",H)   = 0.01*ATR("BENCH","STA",H);
TAVE("LOCAL",H)   = 0.01*ATR("BENCH","LOC",H);
TMRG(H) = 0.01*MTR("BENCH",H);
TBMK(H) = TMRG(H);

DEMAND("STAINCTAX",H) = -TAVE("STATE",H)*sum(F, DEMAND(F,H));
DEMAND("LOCINCTAX",H) = -TAVE("LOCAL",H)*sum(F, DEMAND(F,H));

WB(H)     = -(DEMAND("PRVINV",H) + sum(G, DEMAND(G,H)) + DEMAND("LEISURE",H)*(1 - TBMK(H)));
WALADJ(H) =   DEMAND("PRVINV",H) + sum(G, DEMAND(G,H)) + sum(HT, DEMAND(HT,H)) + sum(F, DEMAND(F,H));

INCTAX("WALADJ%",H) = 100*WALADJ(H)/sum(F, DEMAND(F,H));

display INCTAX, WALADJ;

* MOVE DATA INTO WORKING PARAMETERS
Parameter
   IO(S,C)     'intermediate inputsintermediate inputs'
   VE(C)       'exports'
   TE(C)       'export tax rate'
   VM(C)       'imports'
   TM(C)       'import tax rate'
   DL(C)       'labor inptus'
   TL(C)       'labor tax rate'
   DK(C)       'capital inputs'
   TK(C)       'capital tax rate'
   D(C)        'domestic supply'
   E(C)        'exports'
   M(C)        'imports including duty'
   TX(C)       'excise tax'
   ESUBM(C)    'import aggregation elasticity'
   ETRNX(C)    'export transformation elasticity'
   ESUBKL(C)   'capital-labor elasticty'
   ESUBS(H)    'current consumption-savings elasticity'
   ESUBL(H)    'leisure-consumption elasticity'
   SIGMA(H)    'intra-commodity elasticty'
   DMFBAR(F,C) 'benchmark factor demand';

IO(S,C)     = -SAM(S,C);
E(S)        = -SAM(S,"EXPORTS");
TE(S)       = -SAM("OTH-TAX","EXPORTS")/SAM("EXCHANGE","EXPORTS");
VE(S)       =  E(S)/(1 - TE(S));
VM(C)       = -SAM("EXCHANGE",C);
TM(C)$VM(C) = -SAM("DUTY",C)/VM(C);
DL(C)       = -SAM("LABOR",C);
TL(C)$DL(C) = -SAM("L-TAX",C) / DL(C);
DK(C)       = -SAM("CAPITAL",C);
TK(C)$DK(C) = -SAM("K-TAX",C)/DK(C);
D(C)        =  YB(C) + SAM("EXCHANGE",C) + SAM("DUTY",C);
M(C)        =  SAM("EXCHANGE",C) + SAM("DUTY",C);
TX(C)$YB(C) = -SAM("OTH-TAX",C)/(D(C) - E(C));

Parameter PRDTAX(*,*) 'benchmark production tax rates (%)';
PRDTAX(S,"TE") = 100*TE(S);
PRDTAX(S,"TM") = 100*TM(S);
PRDTAX(S,"TL") = 100*TL(S);
PRDTAX(S,"TK") = 100*TK(S);
PRDTAX(S,"TX") = 100*TX(S);

display PRDTAX;

* ELASTICITIES:
ESUBM(C)  = ESUBP(C,"ESUBM");
ETRNX(S)  = ESUBP(S,"ETRNX");
ESUBKL(C) = ESUBP(C,"ESUBKL");
ESUBS(H)  = ESUBC(H,"ESUBS");
ESUBL(H)  = ESUBC(H,"ESUBL");
SIGMA(H)  = ESUBC(H,"SIGMA");

$onText
$MODEL:SUOMI

$SECTORS:
   W(H)               ! WELFARE INDICES
   Y(C)               ! SECTORAL PRODUCTION:
   A(C)               ! ARMINGTON AGGREGATION.
   CC(H)              ! CURRENT CONSUMPTION:
   K$SHORT            ! CAPITAL SUPPLY (SHORT-RUN MODEL)

$COMMODITIES:
   PFX                ! FOREIGN EXCHANGE
   PF(F)              ! FACTORS OF PRODUCTION.
   PS(C)$DK(C)$SHORT  ! SECTOR-SPECIFIC CAPITAL
   PW(H)              ! WELFARE PRICE INDEX
   PY(C)              ! SECTORAL GOODS PRICES (DOMESTIC OUTPUT)
   PA(C)              ! ARMINGTON IMPORT PRICE AGGREGATE
   PC(H)              ! CURRENT CONSUMPTION

$CONSUMERS:
   GOVT               ! GOVERNMENT (STATE AND LOCAL)
   HH(H)              ! HOUSEHOLDS

$AUXILIARY:
   TAU                ! EQUAL YIELD VARIABLE (MULTIPLIER ON OUTPUT TAXES)

* MARKET LABOR, CAPITAL, FOREIGN EXCHANGE AND GOVERNMENT
* CONSUMPTION AGGREGATE:
$REPORT:
   V:DMF(F,C)$DMFBAR(F,C)          I:PF(F)         PROD:Y(C)
   V:SY(C)$(D(C) - E(C))           O:PY(C)         PROD:Y(C)
   V:EXP(C)$VE(C)                  O:PFX           PROD:Y(C)
   V:IMP(C)$VM(C)                  I:PFX           PROD:A(C)
   V:CL(H)$(-DEMAND("LEISURE",H))  I:PF("LABOR")   PROD:W(H)

$PROD:A(C) s:ESUBM(C)
   O:PA(C)   Q:(YB(C) - E(C))
   I:PFX     Q:VM(C)            P:(1 + TM(C))   A:GOVT T:TM(C)
   I:PY(C)   Q:(D(C)  - E(C))

* CURRENT CONSUMPTION:
$PROD:CC(H) s:SIGMA(H)
   O:PC(H)   Q:(-sum(G, DEMAND(G,H)))
   I:PA(G)   Q:(-DEMAND(G,H))

* PRODUCTION:
$PROD:Y(C) t:ETRNX(C) a:ESUBKL(C)
   O:PY(C)                     Q:(D(C)-E(C)) P:(1 - TX(C))  A:GOVT  N:TAU   M:(max(OTS(SC,C)*TX(C), 0))  T:(min(OTS(SC,C)*TX(C), 0))
   O:PFX                       Q:VE(C)       P:(1 - TE(C))          T:TE(C)
   I:PA(SS)                    Q:IO(SS,C)
   I:PF("LABOR")               Q:DL(C)       P:(1 + TL(C))  A:GOVT  T:TL(C)
   I:PF("CAPITAL")$(NOT SHORT) Q:DK(C)       P:(1 + TK(C))  A:GOVT  T:(KTS(SC,C)*TK(C))
   I:PS(C)$SHORT               Q:DK(C)       P:(1 + TK(C))  A:GOVT  T:(KTS(SC,C)*TK(C))

$PROD:K$SHORT
   I:PF("CAPITAL")  Q:(sum(C$DK(C), DK(C)))
   O:PS(C)          Q:DK(C)

$PROD:W(H) s:ESUBS(H) a:ESUBL(H)
   O:PW(H)          Q:WB(H)
   I:PF("LABOR")    Q:(-DEMAND("LEISURE",H)) P:(1-TBMK(H))  a: A:GOVT T:(-TMRG(H))
   I:PC(H)          Q:(-sum(G, DEMAND(G,H)))                a:
   I:PA("PRVINV")   Q:(-DEMAND("PRVINV",H))

* FEDERAL GOVERNMENT:
$DEMAND:GOVT
   D:PA("STACON")   Q:(-SAM("STACON","STATE"))

* GOVERNMENT INVESTMENT (EXOGENOUS):
   E:PA("GOVINV")   Q:SAM("GOVINV","STATE")

* TERMS FROM THE SAM ADJUSTMENT VECTOR:
   E:PA(C)          Q:SAM(C,"ADJUST")
   E:PF(F)          Q:SAM(F,"ADJUST")
   E:PFX            Q:SAM("EXCHANGE","ADJUST")

* INCOME SUBSIDY TRANSFER:
   E:PW(H)          Q:(-DEMAND("STAINCSUB",H))

* OTHER TRANSFERS:
   E:PW(H)          Q:TRANSFER("STA",H)

* WALRAS ADJUSTMENT:
   E:PW(H)          Q:WALADJ(H)

* LEISURE TAX INTERCEPT:
   E:PF("LABOR")    Q:(sum(H, -TMRG(H)*DEMAND("LEISURE",H)))

* TAXES AT AVERAGE RATES:
   E:PF(F)          Q:(sum(H, TAVE("STATE",H)*DEMAND(F,H)))

* LOCAL GOVERNMENT DEMAND (FIXED):
   E:PA("LOCCON")   Q:(SAM("LOCCON","LOCAL"))

* LOCAL GOVERNMENT INVESTMENT (EXOGENOUS):
   E:PA("GOVINV")   Q:SAM("GOVINV","LOCAL")

* LOCAL INCOME SUBSIDY TRANSFERS:
   E:PW(H)          Q:(-DEMAND("LOCINCSUB",H))

* OTHER TRANSFERS:
   E:PW(H)          Q:TRANSFER("LOC",H)

* INCOME TAXES (AVERAGE RATES):
   E:PF(F)          Q:(sum(H, TAVE("LOCAL",H)*DEMAND(F,H)))

* HOUSEHOLD DEMAND:
$DEMAND:HH(H)
   D:PW(H)          Q:WB(H)

* FACTOR SUPPLIES (NET AVERAGE TAX PAYMENT):
   E:PF(F)          Q:DEMAND(F,H)

* INCOME TAXES AT AVERAGE RATES:
   E:PF(F)          Q:(-(TAVE("STATE",H) + TAVE("LOCAL",H))*DEMAND(F,H))

* LEISURE SUPPLY:
   E:PF("LABOR")    Q:(-(1 - TMRG(H))*DEMAND("LEISURE",H))

* GOVERNMENT TRANSFER:
   E:PW(H)          Q:DEMAND("STAINCSUB",H)
   E:PW(H)          Q:DEMAND("LOCINCSUB",H)

* OTHER TRANSFERS:
   E:PW(H)          Q:(-TRANSFER("STA",H))
   E:PW(H)          Q:(-TRANSFER("LOC",H))

* WALRAS ADJUSTMENT:
   E:PW(H)          Q:(-WALADJ(H))

* EQUAL YIELD CONSTRAINTS:
$CONSTRAINT:TAU
   A("STACON") =g= 1;

* Z:A("STACON")
* K:-1
$offText

* READ THE MPS/GE "HEADER" FILE.  THIS IS GENERATED BY
* THE PREPROCESSOR, MPSPP:
$sysInclude mpsgeset SUOMI

TAU.l = 1;

Parameter
   SUMMARY(*,SC) 'summary statistics'
   DF(F,C,SC)    'factor demand   - % change'
   DOM(C,SC)     'domestic output - % change'
   EXPORT(C,SC)  'exports - % change'
   IMPORT(C,SC)  'imports - % change'
   WELFARE(H,SC) 'welfare - % change'
   LSUPPLY(H,SC) 'labor supply - % change';

* SET THE ITERATION LIMIT TO 0 FOR THE FIRST SCENARIO
* IN ORDER TO CHECK REPLICATION:
SUOMI.iterLim = 0;

* ESTABLISH A NUMERAIRE PRICE INDEX:
PFX.fx = 1;

loop(SC,
*  SET FLAG FOR SHORT-RUN CAPITAL STOCK:
   SHORT = 1$SHORTRUN(SC);

*  SET BENCHMARK FACTOR DEMANDS:
   DMFBAR("LABOR",C)   = DL(C);
   DMFBAR("CAPITAL",C) = DK(C)$(not SHORT);

*  READ IN AVERAGE AND MARGINAL TAX RATES.
   TAVE("STATE",H)   = 0.01*ATR(SC,"STA",H);
   TAVE("LOCAL",H)   = 0.01*ATR(SC,"LOC",H);
   TMRG(H)           = 0.01*MTR(SC,H);
   TRANSFER("LOC",H) = TRANSF(SC,"LOC",H);
   TRANSFER("STA",H) = TRANSF(SC,"STA",H);

*  SOLVE THE SCENARIO:
$  include SUOMI.GEN
   solve SUOMI using mcp;

   SUOMI.iterLim = 1000;

   SUMMARY("CPU",SC)   = SUOMI.resUsd;
   SUMMARY("DEV",SC)   = SUOMI.objVal;
   SUMMARY("ITERS",SC) = SUOMI.iterUsd;

   DF(F,C,SC)    =  DMF.l(F,C);
   DOM(C,SC)     =  SY.l(C);
   EXPORT(C,SC)  =  EXP.l(C);
   IMPORT(C,SC)  =  IMP.l(C);
   WELFARE(H,SC) =  100*(W.l(H) - 1);
   LSUPPLY(H,SC) = -DEMAND("LEISURE",H) + CL.l(H);
);

* CONVERT REPORT VARIABLES INTO PERCENTAGE CHANGES:
DF(F,C,SC)$DF(F,C,"BENCH")       = 100*(DF(F,C,SC) - DF(F,C,"BENCH"))/DF(F,C,"BENCH");
DF("CAPITAL",C,SC)$SHORTRUN(SC)  = 0;
DOM(C,SC)$DOM(C,"BENCH")         = 100*(DOM(C,SC) - DOM(C,"BENCH"))/DOM(C,"BENCH");
EXPORT(C,SC)$EXPORT(C,"BENCH")   = 100*(EXPORT(C,SC)  - EXPORT(C,"BENCH"))/EXPORT(C,"BENCH");
IMPORT(C,SC)$IMPORT(C,"BENCH")   = 100*(IMPORT(C,SC)  - IMPORT(C,"BENCH"))/IMPORT(C,"BENCH");
LSUPPLY(H,SC)$LSUPPLY(H,"BENCH") = 100*(LSUPPLY(H,SC) - LSUPPLY(H,"BENCH"))/LSUPPLY(H,"BENCH");

* SIFT OUT THE SMALL NUMBERS:
DF(F,C,SC)$(abs(DF(F,C,SC)) < 0.1)       = 0;
DOM(C,SC)$(abs(DOM(C,SC))   < 0.1)       = 0;
EXPORT(C,SC)$(abs(EXPORT(C,SC)) < 0.1)   = 0;
IMPORT(C,SC)$(abs(IMPORT(C,SC)) < 0.1)   = 0;
LSUPPLY(H,SC)$(abs(LSUPPLY(H,SC)) < 0.1) = 0;
WELFARE(H,SC)$(abs(WELFARE(H,SC)) < 0.1) = 0;

option WELFARE:1, DF:1, DOM:1, EXPORT:1, IMPORT:1, LSUPPLY:1;

display SUMMARY, WELFARE, DF, DOM, EXPORT, IMPORT, LSUPPLY;