HTGAMS Hall and Taylor´s Model in GAMS

This paper , and its accompanying programs , show how to implement in GAMS (General Algebraic Modeling System) deterministic simulations with standard macroeconomic models, be these models linear or nonlinear, static or dynamic. Our general goals here are: a) to introduce the use of GAMS for solving static and dynamic linear and nonlinear models expressed as system of equations b) to introduce the workings of some linearization techniques c) to provide an interface between the GAMS representation of a dynamic nonlinear model and DUALI , so that one can perform control experiments in deterministic and stochastic environments. As a practical illustration of solution concepts and computational techniques, we use Robert Hall and John Taylor’s macroeconomic model. This is a twelve-equation nonlinear dynamic model for an open economy with flexible exchange rates which generates interesting and realistic patterns of macroeconomic behavior. Three types of simulations of progressive complexity are successively presented. For each of them, there is a corresponding program written in GAMS.