$TITLE Model M48: Large open model SCALAR TM2 Import tariff for good 2 /0/; POSITIVE VARIABLES X1 ! Activity level for sector X1, X2 ! Activity level for sector X2, E1 ! Activity level for sector E1, E2 ! Activity level for sector E2, M1 ! Activity level for sector M1, M2 ! Activity level for sector M2, W ! Activity level for sector W (Hicksian welfare index), P1 ! Price index for commodity X, P2 ! Price index for commodity Y, PL ! Price index for primary factor L, PK ! Price index for primary factor K, PW ! Price index for welfare (expenditure function), PFX ! Read exchange rate index, PR ! Rent wich generate the export demand function CONSh ! Income definition for home agent CONSF ! Income definition for foreign agent; EQUATIONS PRF_X1 Zero profit for sector X1 PRF_X2 Zero profit for sector X2 PRF_E1 Zero profit for sector E1 PRF_E2 Zero profit for sector E2 PRF_M1 Zero profit for sector M1 PRF_M2 Zero profit for sector M2 PRF_W Zero profit for sector W (Hicksian welfare index) MKT_X1 Supply-demand balance for commodity X1 MKT_X2 Supply-demand balance for commodity X2 MKT_PFX Supply-demand balance for commodity PFX MKT_L Supply-demand balance for primary factor L MKT_K Supply-demand balance for primary factor L MKT_W Supply-demand balance for aggregate demand MKT_R Supply-demand balance for rents I_CONSF Income definition for CONSF I_CONSH Income definition for CONSH; * Zero profit conditions PRF_X1.. 150 * PL**(2/3) * PK**(1/3) =G= 150 * P1; PRF_X2.. 50 * PL**(2/5) * PK**(3/5) =G= 50 * P2; PRF_E1.. 100 *P1**0.5*PR**0.5 =G= PFX*100; PRF_E2.. 50 * P2 =G= 50 * 0.99 * PFX; PRF_M1.. 100 * PFX * 1.01 =G= 50 * P1; PRF_M2.. PFX * (1+TM2) * 50 =G= 50 * P2; PRF_W.. 200* P1**0.5*P2**0.5 =G= 200 * PW; * Market clearance conditions MKT_X1.. 150 * X1 + 50 * M1 =G= E1 * 50 * PFX/P1 + 100 * W * PW/P1; MKT_X2.. 50 * X2 + 50 * M2 =G= 50 * E2 + 100 *W *PW/P2 ; MKT_R.. 50 =G= 50 * E1 * PFX/PR; MKT_PFX.. 50 * 0.99 * E2 + E1 * 100 =G= 50 * M2 + 100 * 1.01 * M1 + CONSF/PFX; MKT_W.. 200 * W =G= CONSH / PW; MKT_L.. 120 =G= 100 * X1 * P1/PL + 20 * X2 * P2/PL; MKT_K.. 80 =G= 50 * X1 * P1/PK + 30 * X2 * P2/PK; * Income balance states I_CONSH.. CONSH =E= 120*PL + 80*PK + 50*M2*PFX*TM2; I_CONSF.. CONSF =E= 50*PR; MODEL ALGEBRAIC /PRF_X1.X1, PRF_X2.X2, PRF_E1.E1, PRF_E2.E2, PRF_W.W, MKT_X1.P1, PRF_M1.M1, PRF_M2.M2, MKT_X2.P2, MKT_R.PR, MKT_PFX.PFX, MKT_L.PL, MKT_K.PK, MKT_W.PW, I_CONSH.CONSH, I_CONSF.CONSF /; * Check the benchmark (again): X1.L =1; X2.L =1; E2.L =0; E1.L =1; M2.L =1; M1.L =0; W.L =1; P1.L =1; P2.L =1; PFX.L =1; PK.L =1; PW.FX =1; PR.L =1; PL.L =1; CONSH.L =200; CONSF.L =50; ALGEBRAIC.ITERLIM = 0; SOLVE ALGEBRAIC USING MCP; ALGEBRAIC.ITERLIM = 10000; * Apply a tariff which improves the terms of trade and home * welfare: TM2 =0.20; SOLVE ALGEBRAIC USING MCP;