$TITLE france SCALAR GDPTOTAL /100/ NTSHARE /93.4/ TSHARE /6.6/ DEMANDELAS /0.7/ SUPPLYELAS /5/ TOT /1/ DUTILITY COMPUTED CHANGE IN UTILITY; * THE ABOVE NUMBERS ARE THE ONES YOU CHANGE TO CHANGE THE DATA AND HENCE THE * RESULTS. NTSHARE IS THE SHARE OF THE NON-TRADED SECTOR IN GDP, AND TSHARE IS * THE SHARE OF THE TRADED SECTOR. NTSHARE AND TSHARE SUM TO 100 BY DEFINITION, * SINCE THE ENTIRE GDP OF THE ECONOMY IS TAKEN TO BE 100. CHANGE THESE * PARAMETERS IN ORDER TO DERIVE RESULTS FOR BRITAIN OR THE U.S. (THESE VALUES * REFLECT THE FRENCH LEVEL OF OPENNESS). * DEMANDELAS IS THE ELASTICITY OF SUBSTITUTION IN THE CES UTILITY FUNCTION IN * EQUATION (3), WHICH IS DENOTED IN THE PAPER BY sigma. * SUPPLYELAS IS THE ELASTICITY OF TRANSFORMATION IN THE CET PRODUCTION FUNCTION * IN EQUATION (1), WHICH IS DENOTED IN THE PAPER BY tau. * TOT IS THE RELATIVE PRICE OF THE IMPORT GOOD IN TERMS OF THE EXPORT GOOD, * AND THIS IS WHAT IS CHANGED IN THE COUNTERFACTUAL EXPERIMENTS. $ONTEXT $MODEL:SOE $SECTORS: QPRODUCTION QTRADE QUTILITY * EACH SECTOR HAS ASSOCIATED WITH IT AN ACTIVITY LEVEL, I.E. OUTPUT IN THAT * SECTOR. THERE ARE THREE 'SECTORS' IN THIS MODEL, THE PRODUCTION SECTOR * QPRODUCTION, AND TWO PSEUDO-SECTORS ASSOCIATED WITH TRADE AND CONSUMPTION * (SEE BELOW) $COMMODITIES: PX PM PNT PGDP PUTILITY * EACH COMMODITY HAS A PRICE ASSOCIATED WITH IT. PX IS THE EXPORT GOOD, * PM THE IMPORT GOOD, PNT THE NON-TRADED GOOD, PGDP THE SINGLE FACTOR OF * PRODUCTION, AND PUTILITY THE UTILITY GOOD PRODUCED BY THE 'QUTILITY' SECTOR * AND WHICH IS CONSUMED BY THE CONSUMER $CONSUMERS: YFRENCH * EACH CONSUMER HAS AN INCOME LEVEL ASSOCIATED WITH IT. HERE THERE IS JUST * ONE REPRESENTATIVE CONSUMER * IN THE SOLUTION LIST FILE ALL THESE VARIABLES (I.E. ACTIVITY LEVELS, PRICES AND * INCOME LEVELS) WILL BE REPORTED $DEMAND: YFRENCH E: PGDP Q: GDPTOTAL D: PUTILITY Q: 100 * THE CONSUMER IS ENDOWED WITH THE ENTIRE SUPPLY OF THE UNIQUE FACTOR OF * PRODUCTION, PGDP, WHICH IS OF COURSE EQUAL TO THE GDP OF THE ECONOMY, * AND SPENDS ALL HER INCOME ON THE UTILITY GOOD $PROD: QUTILITY s: DEMANDELAS I: PNT Q: NTSHARE I: PM Q: TSHARE O: PUTILITY Q: 100 * THE UTILITY GOOD IS PRODUCED VIA THIS CES UTILITY FUNCTION (WITH ELASTICITY * OF SUBSTITUTION EQUAL TO DEMANDELAS); THE CONSUMER * CONSUMES NON-TRADED GOODS AND IMPORTS. THE REASON I HAVE THE CONSUMER'S * UTILITY FUNCTION AS A SEPARATE PSEUDO-PRODUCTION FUNCTION IS THAT THE * PROGRAMME REPORTS THE OUTPUT OF ALL SECTORS, AND THE OUTPUT OF THIS * SECTOR IS THEN THE LEVEL OF UTILITY $PROD:QTRADE s: 0 I: PX Q: TOT O: PM Q: 1 * THIS SECOND PSEUDO PRODUCTION FUNCTION MODELS TRADE AS A SECTOR IN WHICH * EXPORTS ARE EXCHANGED FOR IMPORTS AT A FIXED (EXOGENOUS) RELATIVE PRICE $PROD:QPRODUCTION t: SUPPLYELAS I: PGDP Q: GDPTOTAL O: PNT Q: NTSHARE O: PX Q: TSHARE * ALL PRIMARY FACTORS OF PRODUCTION (I.E. THE ENTIRE ENDOWMENT OF PGDP) ARE USED * AS INPUTS IN THIS SINGLE PRODUCTION SECTOR, WHICH HAS 2 OUTPUTS, THE NON- * TRADED GOOD AND EXPORTS. THE ELASTICITY OF TRANSFORMATION IN THIS CONSTANT * ELASTICITY OF TRANSFORMATION PRODUCTION FUNCTION IS EQUAL TO SUPPLYELAS. $OFFTEXT * THAT COMPLETES THE SPECIFICATION OF THE MODEL. THERE FOLLOW VARIOUS * COMMANDS TELLING GAMS TO SOLVE IT $SYSINCLUDE mpsgeset SOE PX.FX = 1; * THIS SETS THE PRICE OF THE EXPORT GOOD EQUAL TO ONE; I.E. IT SPECIFIES THAT * THE EXPORT GOOD IS THE NUMERAIRE GOOD $INCLUDE SOE.GEN SOLVE SOE USING MCP; * SINCE THE IMPORT PRICE WAS FIXED AT 1 INITIALLY THIS STATEMENT GETS * IT TO SOLVE FOR THE BENCHMARK * NOW CHANGE THE IMPORT PRICE TO REFLECT THE FRENCH TERMS OF TRADE SHOCK TOT = 1.612; * AND NOW GET IT TO SOLVE FOR THE NEW EQUILIBRIUM $INCLUDE SOE.GEN SOLVE SOE USING MCP; * AND THE OUTPUT FOR THIS SOLUTION WILL GIVE THE COST OF THE TERMS OF TRADE * SHOCK IN FRANCE FOR THE CASE WHERE SIGMA IS 0.7 AND TAU IS 5 DUTILITY = 100*(1 - QUTILITY.L/1); * THIS GENERATES THE CHANGE IN UTILITY AND ASKS GAMS TO DISPLAY THIS TO 8 DIGITS OPTION DUTILITY:8; DISPLAY DUTILITY; * THE KEY RESULT WILL NOW BE DISPLAYED AT THE END OF THE LOG FILE