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GTAP Resources: Resource Display

GTAP Resource #7174

"Flexible nesting using standard GAMS"
by van der Mensbrugghe, Dominique


Abstract
Most policy-oriented computable general equilibrium (CGE) models use some form of nesting of CES functions to reproduce plausible production technologies that approximate the substitution relations across inputs. For example, the standard GTAP model (Corong et al. 2017), starts with a top-level nest that segments inputs into two sets: (1) commodities are assigned to an intermediate demand bundle and (2) factors of production are assigned to a value bundled. Subsequent CES nests determine demand for individual commodities and factors of production. In some sense, the standard GTAP nest is the simplest possible nesting of the production technology using the GTAP database. Once other considerations are taken into account, for example separating out the energy commodities, land, labor by skill, etc., the production nesting can be significantly more complex. Any change to the production nest necessarily involves some modifications to the model code—and this is potentially a significant barrier for the occasional CGE user. MPSGE, GAMS-linked software developed by Tom Rutherford, provides a modeling interface that overcomes this with a relatively straightforward implementation of flexible CES nests. This paper provides an alternative for implementing flexible nests, which hones to using standard GAMS code, but provides the same level of ease of use as the MPSGE implementation including automatic calibration. It is implemented for the Standard GTAP Model in GAMS code described in van der Mensbrugghe 2018.

In addition to flexible production nests, flexible nests are also deployed for the ‘make’ module, consumer demand and factor allocation. The code also allows for using the additive form of the CES and CET.

The paper describes the core specification of each of the flexible nest modules and examples of the user-based inputs. The accompanying GAMS code demonstrates the use of the flexible code and compares the results with the standard model without the flexible nests.


Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Version:
Created: van der Mensbrugghe, D. (4/10/2024)
Updated: van der Mensbrugghe, D. (4/10/2024)
Visits: 160
- Advances in quantitative methods
- Functional forms and closure rules
- Model extension/development


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