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GEMPACK manual

Author

Listed:
  • Mark Horridge
  • Michael Jerie
  • Dean Mustakinov
  • Florian Schiffmann

Abstract

GEMPACK (General Equilibrium Modelling PACKage) is a modeling system for CGE economic models, used at the Centre of Policy Studies (CoPS) in Melbourne, Australia, and sold to other CGE modellers. Some of the more well-known CGE models solved using GEMPACK are the GTAP model of world trade, and the VURM, ORANI-G, USAGE and TERM models used at CoPS. All these models share a distinctive feature: they are formulated as a system of differential equations in percentage change form; however, this is not required by GEMPACK. A characteristic feature of CGE models is that an initial solution for the model can be readily constructed from a table of transaction values (such as an input-output table or a social accounting matrix) that satisfies certain basic accounting restrictions. GEMPACK builds on this feature by formulating the CGE model as an initial value problem which is solved using standard techniques. The GEMPACK user specifies a model by constructing a text file listing model equations and variables, and showing how variables relate to value flows stored on an initial data file. GEMPACK translates this file into a computer program which solves the model, i.e., computes how model variables might change in response to an external shock. The original equation system is linearized (reformulated as a system of first-order partial differential equations). If most variables are expressed in terms of percentage changes (akin to log changes) the coefficients of the linearized system are usually very simple functions of database value flows. Computer algebra is used at this point to greatly reduce (by substitution) the size of the system. Then it is solved by multistep methods such as the Euler method, midpoint method or Gragg's modified Midpoint method. These all require solution of a large system of linear equations; accomplished by sparse matrix techniques. Richardson extrapolation is used to improve accuracy. The final result is an accurate solution of the original non-linear equations. This linearized approach, originally devised to solve medium-sized CGE models on early computers, has since proved capable (on modern computers) of solving very large models quite quickly. Additionally it has lent itself to some interesting extensions, such as: a Gaussian quadrature method of estimating confidence intervals for model results from known distributions of shock or parameter values; a way to formulate inequality constraints or non-differentiable equations as complementarities; and a technique to decompose changes in model variables due to several shocks into components due to each individual shock. The underlying numerical approach is complemented by several GUI programs that: ease viewing of large multidimensional arrays often found in CGE databases; manage complex (e.g., multi-period) simulations; and allow interactive exploration and explanation of simulation results. The document provides a complete description of GEMPACK features, instructions for use, and many examples.

Suggested Citation

  • Mark Horridge & Michael Jerie & Dean Mustakinov & Florian Schiffmann, 2019. "GEMPACK manual," Centre of Policy Studies/IMPACT Centre Working Papers gpman, Victoria University, Centre of Policy Studies/IMPACT Centre.
  • Handle: RePEc:cop:wpaper:gpman
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    File URL: https://www.copsmodels.com/gpmanual.pdf
    File Function: Initial version, 2019-09
    Download Restriction: no
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    Citations

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    Cited by:

    1. Jeffrey C. Peters & Thomas W. Hertel, 2017. "Achieving the Clean Power Plan 2030 CO2 Target with the New Normal in Natural Gas Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    2. Akihito Asano & Rod Tyers, 2015. "Third Arrow Reforms and Japan’s Economic Performance," Economics Discussion / Working Papers 15-17, The University of Western Australia, Department of Economics.
    3. Roos Elizabeth & Adams Philip, 2019. "Fiscal Reform – Aid or Hindrance: A Computable General Equilibrium (CGE) Analysis for Saudi Arabia," Working Papers 1317, Economic Research Forum, revised 21 Aug 2019.
    4. Hans G. Jensen & Kym Anderson, 2017. "Grain Price Spikes and Beggar-thy-Neighbor Policy Responses: A Global Economywide Analysis," World Bank Economic Review, World Bank Group, vol. 31(1), pages 158-175.
    5. Rod Tyers, 2014. "Asymmetry in Boom-Bust Shocks: Australian Performance with Oligopoly," CAMA Working Papers 2014-50, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    6. Dixon, Peter & van Meijl, Hans & Rimmer, Maureen & Shutes, Lindsay & Tabeau, Andrzej, 2013. "RED vs. REDD: Biofuel Policy vs. Forest Conservation," Working papers 152082, Factor Markets, Centre for European Policy Studies.
    7. Enkhbayar Shagdar & Tomoyoshi Nakajima, 2018. "Economic Effects of the USA - China Trade War: CGE Analysis with the GTAP 9.0a Data Base," Discussion papers 1806e, ERINA - Economic Research Institute for Northeast Asia.

    More about this item

    Keywords

    Computable General Equilibrium; CGE; software; GEMPACK;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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