shovmge.gms : The economic effects of UK membership in the EC

Description

Miller-Spencer - economic effects of UK membership.


Reference

  • Miller, M H, and Spencer, J E, The Static Economic Effects of the UK joining the EEC: A General Equilibrium Approach. R.E.Stud, 1975.

Large Model of Types : MPSGE mcp


Category : GAMS Model library


Main file : shovmge.gms

$title Miller-Spencer - Economic Effects of UK Membership (SHOVMGE,SEQ=153)

$onText
Miller-Spencer - economic effects of UK membership.


Miller, M H, and Spencer, J E, The Static Economic Effects of the UK
joining the EEC: A General Equilibrium Approach. R.E.Stud, 1975.

Keywords: mixed complementarity problem, general equilibrium model, european
          economic community, economic effects, GAMS - MPSGE framework
$offText

Set
   R  'regions'         / UK, EC, CW, RW /
   F  'primary factors' / K, L /
   G  'goods'           / X, Z /
   SC 'scenarios' / BENCH   'Benchmark replication'
                    POST_NT 'Integration without transfer'
                    POST_T  'Integration with tariff transfer'
                    GFT     'Global free trade'                /
   NON_EC(R) 'regions which are not the EC' / UK, CW, RW /;

Alias (R,RR), (R,RT);

Table ESUB(R,*) 'elasticities (top level and by aggregate)'
        Top    X    Z
   UK   0.1  3.0  3.0
   EC   0.1  3.0  3.0
   CW   0.1  3.0  3.0
   RW   0.1  3.0  3.0;

Table LSHR(R,G) 'labor value shares (table I of MS)'
           X     Z
   UK   0.64  0.35
   EC   0.64  0.45
   CW   0.60  0.32
   RW   0.65  0.41;

Parameter FSHR(G,R,F) 'factor value shares in production';

FSHR(G,R,"L") = LSHR(R,G);
FSHR(G,R,"K") = 1 - LSHR(R,G);

Table CREF(G,R,R) 'reference consumption levels (tables VIIa and VIIb of MS)'
               UK       EC      CW        RW
   X.UK   26.9811   1.5601  0.5619    5.9015
   X.EC    0.8046  80.9840  0.1577    9.6285
   X.CW    0.0461   0.0127  5.8316    0.3753
   X.RW    2.3914   6.9002  0.7337  190.1027
   Z.UK    0.5354   0.0367  0.0028    0.0829
   Z.EC    0.0494   1.9401  0.0008    0.1221
   Z.CW    0.1782   0.1586  0.1856    0.3932
   Z.RW    0.5156   1.2882  0.0311    1.9737;

Table PREF(R,*) 'reference prices (table III of MS)'
             X       Z       K       L
   UK   0.3301  0.6117  0.2730  0.2135
   EC   0.5661  2.0740  0.5165  0.3850
   CW   0.7064  0.6436  0.3340  0.3950
   RW   0.6367  1.0020  0.4685  0.8438;

Table TREF(G,R,R) 'reference tariff rates (table II of MS.)'
             UK     EC     CW     RW
   X.UK          0.150  0.050  0.125
   X.EC   0.150         0.200  0.125
   X.CW          0.150         0.125
   X.RW   0.150  0.150  0.200
   Z.UK          0.200         0.200
   Z.EC                        0.200
   Z.CW          0.200         0.200
   Z.RW          0.200              ;

Table T_NT(G,R,R) 'tariff rates - no transfer (table II of MS.)'
             UK     EC     CW     RW
   X.UK                 0.200  0.125
   X.EC                 0.200  0.125
   X.CW   0.150  0.150         0.125
   X.RW   0.150  0.150  0.200
   Z.UK                        0.200
   Z.EC                        0.200
   Z.CW   0.200  0.200         0.200
   Z.RW   0.200  0.200              ;

Table T_TR(G,R,R,R) 'tariff rates with transfers (table II of MS.)'
          UK.UK  UK.EC  EC.EC  CW.CW  RW.RW
   X.UK                        0.200  0.125
   X.EC                        0.200  0.125
   X.CW   0.105  0.045  0.150         0.125
   X.RW   0.105  0.045  0.150  0.200
   Z.UK                               0.200
   Z.EC                               0.200
   Z.CW   0.020  0.180  0.200         0.200
   Z.RW   0.020  0.180  0.200              ;

Parameter T(G,R,R,R,SC) 'tariff rates by scenario';
T(G,R,RR,RR,"BENCH")   = TREF(G,R,RR);
T(G,R,RR,RR,"POST_NT") = T_NT(G,R,RR);
T(G,R,RR,RT,"POST_T")  = T_TR(G,R,RR,RT);
T(G,R,RR,RT,"GFT")     = 0;

Parameter
   SREF(G,R,R)   'benchmark subsidies' / Z.UK.UK 0.20, Z.EC.UK 0.20 /
   PCREF(G,R,RR) 'benchmark consumption price index';

PCREF(G,R,RR) = PREF(R,G)*(1 + TREF(G,R,RR))*(1 - SREF(G,R,RR));

Parameter TBAL(*,R) 'trade balance check';
TBAL(G,R) = sum(RR, PREF(R,G) *CREF(G,R,RR)*(1 - SREF(G,R,RR)))
          - sum(RR, PREF(RR,G)*CREF(G,RR,R)*(1 - SREF(G,RR,R)));
TBAL("TOTAL",R) = sum(G, TBAL(G,R));

display TBAL;

Parameter S(G,R,RR,SC) 'subsidy rates by scenario';
S(G,R,RR,"BENCH") = SREF(G,R,RR);

Parameter
   E(F,R)    'factor endowments'
   FD(F,G,R) 'reference factor demand'
   YREF(G,R) 'reference output level'
   DREF(G,R) 'reference demand';

DREF(G,R) = sum(RR, PCREF(G,RR,R)*CREF(G,RR,R));
YREF(G,R) = sum(RR, CREF(G,R,RR));
FD(F,G,R) = FSHR(G,R,F)*YREF(G,R)*PREF(R,G)/PREF(R,F);
E(F,R)    = sum(G, FD(F,G,R));

$onText
$MODEL:MILLER

$SECTORS:
   U(R)   Y(G,R)   D(G,R)

$COMMODITIES:
   PU(R)  PC(G,R)  W(F,R)  P(G,R)

$CONSUMERS:
   RA(R)

$PROD:Y(G,R) s:1.0
   O:P(G,R)        Q:YREF(G,R)
   I:W(F,R)        Q:FD(F,G,R)     P:PREF(R,F)

$PROD:D(G,R) s:ESUB(R,G)
   O:PC(G,R)       Q:DREF(G,R)
   I:P(G,RR)       Q:CREF(G,RR,R)  P:PCREF(G,RR,R)
+  A:RA(RR)        T:(-S(G,RR,R,SC))
+  A:RA(R)         T:(T(G,RR,R,R,SC)*(1 - S(G,RR,R,SC)))
+  A:RA("EC")      T:(T(G,RR,R,"EC",SC)*(1 - S(G,RR,R,SC)))$NON_EC(R)

$PROD:U(R) s:1
   O:PU(R)         Q:(SUM(G, DREF(G,R)))
   I:PC(G,R)       Q:DREF(G,R)

$DEMAND:RA(R) s:1
   E:W(F,R)        Q:E(F,R)
   D:PU(R)
$offText

Parameter EV(R,SC) 'equivalent variation (%)';

$sysInclude mpsgeset MILLER

W.l(F,R) = PREF(R,F);
P.l(G,R) = PREF(R,G);

loop(SC,
$  include MILLER.GEN
   solve MILLER using mcp;

   EV(R,SC) = 100*(U.l(R) - 1);
);
display EV;