Training Workshop

Fundamental Concepts and Programming Strategies for
Economic Equilibrium Modeling with GAMS

August 7-11, 2006

Ministerio de Comercio Exterior y Turismo
Office of Economic Research
Vice Ministry of Foreign Trade

Objective

This workshop is for professional and student economists who wish to start learning how to do applied policy analysis with economic data. The material may also be of use for simulation analysis of theoretical models. The workshop will provide an introduction to applied partial and general equilibrium models, focusing especially on trade policy applications in the Peruvian context. No previous knowledge of GAMS modeling is assumed, but we recommend, however, that minimal preparation for this course would be graduate courses in microeconomics and experience with data analysis, e.g. use of Excel.

The first day of the workshop will consist of a mini-symposium surveying ongoing research in Peru involving policy analysis with economic equilibrium models. Presentations will be presented by both academic researchers and economists from government agencies. Details of the symposium will be posted during June.

The teaching technique we will follow consists of three steps repeated each half day: (1) a brief lecture, (2) examination and discussion of techniques via the use of simple template models, (3) exercises for the participants. The instructor will be available in the meeting room for individual consultation beginning at 8am each day, and the course will then run from 9am to 4pm with a one hour break at lunch.

Workshop Topics and Schedule

Monday, August 7:

• Mini-symposium on economic equilibrium analysis in Peru
• Morning session from 9am to 12pm.
• Afternoon session from 2 to 5pm.
• Workshop program will be posted in mid-June.

Tuesday, August 8:

• Morning
• Getting Started with GAMS
  • An overview of the class of models to be covered.
  • The spatial price equilibrium model
  • Sample application to agricultural trade policy.
  • An introductory programming exercise: scenario analysis with an existing model.
• Afternoon
• Building Blocks of Applied Economic Equilibrium Analysis
  • Undergraduate economcis review: linear and isoelastic functional forms
  • Graduate economics review: constant-elasticity-of-substitution (CES) production and cost functions.
  • Putting CES functions to work: the calibrated share form.
  • Calibrating a model to market data.
  • Programming exercise: calibration and policy analysis from start to finish.

Wednesday, August 9:

• Morning
• Integrating GAMS and Excel
  • Transferring source data into GAMS
  • Using Excel for displaying GAMS output.
  • The GAMS GDX Viewer and related tools.
  • Generating tables and figures from model output.
  • Programming exercise: preparing charts and tables summarizing insights from a trade policy simulation
• Afternoon
• Wages, Rental Rates and the Multimarket Effects of Trade Policy Measures
  • The competitive producer
  • Coexistant formal and informal labor markets.
  • Sector-specific capital and the price elasticity of supply.
  • Programming exercise: assessing the employment and factor market implications of trade

Thursday, August 10:

• Morning
• Product variety, Dixit-Stiglitz preferences and endogenous productivity.
  • A partial equilibrium model of service trade and FDI.
  • Trade policy analysis with endogenous productivity responses: a prototype example.
  • Programming exercise with the prototype FDI model.
• Afternoon
• The Shoven-Whalley general equilibrium model
  • Calibration of a general equilibrium model to a social accounint matrix.
  • An open economy application.
  • A multi-regional model.

Friday, August 11:

• Morning
• An introduction to three economic equilibrium models for Peru
  • A multiregional GTAP-based trade model
  • A multiregional partial equilibrium trade model.
  • An open economy model.
  • An introduction to sensitivity analysis with the MINCETUR models.
• Afternoon
• Dynamic extensions of the spatial price equilibrium model.

Venue and Accomodation

How to Prepare

Workshop participants can do a number of things to prepare for the workshop. Here are some suggestions:

• Download the GAMS User's Guide.
• Install a copy of GAMS and a workshop license file (when it becomes available).
• Study background material provided over the web, including the MPSGE home page at GAMS .
• Study material on Rutherford's web page.
• Find a laptop computer to use at the workshop. All participants must bring their own portable computer.

Course Fees

Our intent is to run this workshop on a "break-even basis". Fees will be used to defer travel expenses for non-resident instructors. Limits will be placed on both both local and foreign participants. Should the course be over-subscribed, we will be forced to select among applicants on the basis of interest and aptitude. We will solicit applications through the month of June, at which point fees must be paid promptly during the first week of July by selected participants. We will form a waiting list as required.

The Instructor

Thomas F. Rutherford is consultant to the Office of Economic Research, MINCETUR and former Professor of Economics at the University of Colorado at Boulder. He is the inventor of the MPSGE software and has published a number of papers on general equilibrium applications.