$TITLE: Model M61-MPS: External Economies of Scale, MPS/GE version $ONTEXT The model is based on the benchmark social accounts for model M1-1: Production Sectors Consumers Markets | X Y W | CONS ------------------------------------------------------ PX | 100 -100 | PY | 100 -100 | PU | 200 | -200 PW | -40 -60 | 100 PZ | -60 -40 | 100 ------------------------------------------------------ $OFFTEXT PARAMETER ENDOW Size index for the economy B External economies parameter; ENDOW = 1; B = 0.2 $ONTEXT $MODEL:M61 $SECTORS: X ! Activity level for sector X Y ! Activity level for sector Y W ! Activity level for sector W (Hicksian welfare index) $COMMODITIES: PX ! Price index for commodity X PY ! Price index for commodity Y PW ! Price index for primary factor L PZ ! Price index for primary factor S PU ! Price index for welfare (expenditure function) $CONSUMERS: CONS ! Income level for consumer CONS $AUXILIARY: XQADJ ! Quantity adjustment (positive when X>1) XPADJ ! X output subsidy rate (positive when X>1) $PROD: X s:1 O:PX Q:100 A:CONS N:XPADJ M:-1 I:PW Q: 40 I:PZ Q: 60 $PROD: Y s:1 O:PY Q:100 I:PW Q: 60 I:PZ Q: 40 $PROD: W s:1 O: PU Q:200 I: PX Q:100 I: PY Q:100 $DEMAND:CONS D:PU Q:200 E:PW Q:(ENDOW*100) E:PZ Q:(ENDOW*100) E:PX Q:100 R:XQADJ $CONSTRAINT:XQADJ XQADJ =E= X**(1/(1-B)) - X; $CONSTRAINT:XPADJ XPADJ * X =E= XQADJ; $OFFTEXT $SYSINCLUDE mpsgeset M61 * Adjust bounds so that the auxiliary variables can take on * negative values: PY.L = 1; XQADJ.LO = -INF; XPADJ.LO = -INF; * Benchmark replication $INCLUDE M61.GEN SOLVE M61 USING MCP; * Counterfactual: expand the size of the economy ENDOW = 2; $INCLUDE M61.GEN SOLVE M61 USING MCP; * Counterfactual: contract the size of the economy ENDOW = 0.8; $INCLUDE M61.GEN SOLVE M61 USING MCP;