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by: Clifford Mertz


Clifford Mertz
Texas A&M
GPA 3.72


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This 3 page Study Guide was uploaded by Clifford Mertz on Wednesday October 21, 2015. The Study Guide belongs to AGEC 685 at Texas A&M University taught by Staff in Fall. Since its upload, it has received 30 views. For similar materials see /class/225928/agec-685-texas-a-m-university in Agricultural & Resource Econ at Texas A&M University.

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Date Created: 10/21/15
AGEC 685 section 329 Directed Study Introduction to Computable General Equilibrium Model Final Exam Review Below are topics we discussed in class We add a learning objective after each topic to remind ourselves of what we should accomplish Topic 1 Overview of the CGE modeling We started by examining what was a CGE model and what kinds of problems were more appropriate to be examined by CGE models We also looked at the CGE model and compared it with a partial equilibrium model and an econometric approach Then we considered some of the bene ts and drawbacks of CGE modeling Then we looked at the overall steps in CGE modeling how agents in the economy t in the system and how commodity ows in the system We nished with the theory behind CGE modeling Walras law Learning Objective We should know what is CGE modeling and why is it important as well as what are the bene ts and drawbacks of CGE modeling We should be acquainted with steps in modeling the CGE problem Given a particular problem we should be able to decide and justify our decision on which model CGE model partial equilibrium or an econometric approach should be used We should also understand Walras law Topic 2 The basic structure of the CGE model We started with the basic relationships that compose CGE model and characteristics of solutions involving depiction of industry and factor demands zero pro ts households and the government Then we looked at Walras law which later led us to understand the mixed complementary relationship that was a basic concept of how the CGE model was solved We also looked at the complementary requirements of a mixed complementary problem After that we modi ed the basic CGE model to include a tax Finally we conducted a comparative analysis between scenarios without and with a tax and brie y interpreted those results Learning Objective We should be able to set up the basic relationships for a simple CGE model as we did in homework 1 Given comparative results we should be able to interpret results between the benchmark and the counterfactual equilibriums Especially we should know why counterfactual equilibrium results differ from the benchmark equilibrium results and what are the factors driving these kinds of results Topic 3 Introduction to GAMS The focus of this topic was to make one familiar with GAMS and learn the basic features of GAMS and GAMS IDE Learning Objective We have sufficiently demonstrated this knowledge in homework2 and 3 So there will be no questions on GAMS during the inclass final exam Topic 4 Casting CGE models in GAMS The importance of this topic was to learn the basics of formulating CGE models in GAMS Learning Objective We have sufficiently demonstrated this knowledge in homework2 and 3 So there will be no questions on GAMS during the inclass final exam Topic 5 Nested function We discussed the nested functions and the usefulness of the nested functions In class we made use of a diagram to illustrate how the nested functions were modeled in the production and the consumption We also looked at pros and cons between the Cobb Douglas and CBS functions We learned how to incorporate the nested functions in GAMS Learning Objective Everyone has already had an opportunity to model these nested functions in GAMS through homework 3 so we should not worry about the GAMS part However given production sectors factors or consumption goods we should be able to show how to model nested functions using a simple diagram and should also know the logic behind the use of these nested functions We should be able to decide on functional forms used in each nest We do not have to memorize their specific functional forms but should know the pros and cons for Cobb Douglas and CBS since they are commonly used in CGE models Topic 6 Data amp Calibration We briefly looked at SAM and InputOutput 10 tables and how to read and interpret numbers from these tables We reviewed steps used in building the data and what to do if we have inconsistent data Then we used some numerical examples to show how to calibrate behavioral parameters We also learned how to enter SAM data in GAMS and how to use GAMS to calibrate behavioral parameters We also learned from homework 2 Q3 problem regarding the implication the calibration procedure has on the benchmark equilibrium Learning Objective We should understand values or numbers given in SAM or 10 tables and know steps used to develop data as well as what to do when facing inconsistent data such as when demands are not equal to supplies or household incomes are not equal to household expenditures Since we have already worked on the calibration procedure in the homework there is no numerical question on the calibration However we should recognize the signi cance of the calibration procedure and how it in uences the benchmark equilibrium results Topic 6 Modeling an open economy In this topic we learned how to modify andor add equations in the model when moving from a closed economy to an open economy We also learned how to incorporate an open economy in GAMS Learning Objective We should know the basic structure of the open economy model and know how to set up in GAMS This part is already included in homework 3 so it will not be an inclass nal exam Topic 7 Evaluating impacts of policy changes We took a quick look at how to calculate welfare measures CV and EV and prices and quantities measures in evaluating impacts of policy changes Learning Objective We should know how welfare measures CV and EV and prices and quantities measures are computed Topic 8 Mixed Complementary Problem MCP We learned how the MCP works and what requirements for solving the MCP are as well as what to do if we have peculiar results Learning Objective We should understand how the MCP works and requirements for solving this type of problem We should be able to recognize if results are rational or absurd as well as know how to overcome those results GOOD LUCK


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