$TITLE Model M44: Small open economy model with a (auction) quota * quota is implemented with licenses, modeled as an extra good LIC $ONTEXT In this example, units are chosen such that all DOMESTIC prices equal one initially. Implied world prices are then P1/P2 = 1.2 Production Sectors Consumer Markets | X1 X2 E1 M2 W CONS ------------------------------------------------------------------ P1 | 150 -50 -100 P2 | 40 60 -100 PL | -100 -20 120 PK | -50 -20 70 PW | 200 -200 PFX | 50 -50 PLIC | -10 10 ------------------------------------------------------------------ $OFFTEXT PARAMETERS PE2 Export price of good 2 PM1 Import price of good 1 PE1 Export price of good 1 PM2 Import price of good 2 TM2 Import tariff for good 2 ENDOW Endowment multiplier LSUP License supply; PE1 = 1; PM2 = 1/(1.2); PE2 = PM2*0.99; PM1 = 1.01; TM2 = 0.20; ENDOW = 1; LSUP = 1; $ONTEXT $MODEL:M42 $SECTORS: X1 ! Production index for good 1 X2 ! Production index good 2 E1 ! Export level of good 1 E2 ! Export level of good 2 M1 ! Import level of good 1 M2 ! Import level of good 2 W ! Welfare index $COMMODITIES: P1 ! Price index for good 1 P2 ! Price index for good 1 PFX ! Read exchange rate index PW ! Welfare price index PL ! Wage index PK ! Capital rental index PLIC ! License supply $CONSUMERS: CONS ! Income level for representative agent $PROD:X1 s:1 O:P1 Q:150 I:PL Q:100 I:PK Q:50 $PROD:X2 s:1 O:P2 Q:40 I:PL Q:20 I:PK Q:20 $PROD:E1 O:PFX Q:(50*PE1) I:P1 Q:50 $PROD:M2 O:P2 Q:60 I:PFX Q:(60*PM2) I:PLIC Q:60 $PROD:E2 O:PFX Q:(60*PE2) I:P2 Q:60 $PROD:M1 O:P1 Q:50 I:PFX Q:(50*PM1) $PROD:W s:1 O:PW Q:200 I:P1 Q:100 I:P2 Q:100 $DEMAND:CONS D:PW Q:200 E:PL Q:(120*ENDOW) E:PK Q: (70*ENDOW) E:PLIC Q:(60*LSUP) $OFFTEXT $SYSINCLUDE mpsgeset M42 PW.FX = 1; E1.L = 1; M2.L = 1; E2.L = 0; M1.L = 0; PLIC.L = 1/6; M42.ITERLIM = 0; $INCLUDE M42.GEN SOLVE M42 USING MCP; M42.ITERLIM = 2000; $INCLUDE M42.GEN SOLVE M42 USING MCP; * Counterfactual experiment is free trade LSUP = 20; $INCLUDE M42.GEN SOLVE M42 USING MCP; LSUP = 1; ENDOW = 2; $INCLUDE M42.GEN SOLVE M42 USING MCP;