kehomge.gms : Multiple equilibria in a simple GE model

Description

This is a simple general equilibrium model with multiple (three)
isolated equilibria.  There are four commodities, two
Leontief production activities, and four consumers with Cobb-
Douglas preferences.

Reference

  • Kehoe, T, A Numerical Investigation of the Multiplicity of Equilibria. Mathematical Programming Study 23 (1985), 240-258.

Small Model of Types : MPSGE mcp


Category : GAMS Model library


Main file : kehomge.gms

$TITLE  Multiple equilibria in a simple GE model (KEHOMGE,SEQ=149)
$Ontext
       This is a simple general equilibrium model with multiple (three)
       isolated equilibria.  There are four commodities, two
       Leontief production activities, and four consumers with Cobb-
       Douglas preferences.


Kehoe, T, A Numerical Investigation of the Multiplicity of Equilibria.
Mathematical Programming Study 23 (1985), 240-258.

       MILES may find any of the three equilibria depending
       on the  starting point.

$Offtext

SET     G       GOODS /G1*G4/
        S       SECTORS /S1,S2/
        C       CONSUMERS /C1*C4/
        EQ      EQUILIBRIA /EQ1*EQ3/;

TABLE SP(G,EQ)   Starting points for finding various equilibria.

                EQ1     EQ2     EQ3
        G1      1       1       1
        G2      1       1       0.8
        G3      1       0.2     0.7
        G4      0.2     1       1

TABLE E(G,C) Factor endowments
                C1      C2      C3      C4
        G1      5
        G2              5
        G3                      40
        G4                              40

TABLE ALPHA(G,C)  Budget shares
                C1      C2      C3      C4
        G1      0.52    0.86    0.50    0.06
        G2      0.40    0.10    0.20    0.25
        G3      0.04    0.02    0.2975  0.0025
        G4      0.04    0.02    0.0025  0.6875

TABLE A(G,S)  Activity analysis matrix
                S1      S2
        G1       6      -1
        G2      -1       3
        G3      -4      -1
        G4      -1      -1

$ONTEXT

$MODEL:KEHOE

$SECTORS:
        Y(S)

$COMMODITIES:
        P(G)

$CONSUMERS:
        H(C)

$DEMAND:H(C)   s:  1.00
    E:P(G)      Q:E(G,C)
    D:P(G)      Q:ALPHA(G,C)

$PROD:Y(S)
    O:P(G)$(A(G,S) GT 0) Q:A(G,S)
    I:P(G)$(A(G,S) LT 0) Q:(-A(G,S))

$OFFTEXT

$SYSINCLUDE mpsgeset KEHOE

PARAMETER PRICES(G,EQ), LEVELS(S,EQ);

LOOP(EQ,

$INCLUDE KEHOE.GEN

        P.L(G) = SP(G,EQ);

        SOLVE KEHOE USING MCP;

        PRICES(G,EQ) = P.L(G);
        LEVELS(S,EQ) = Y.L(S);
);

DISPLAY PRICES, LEVELS;