GEM-E3 Modelling Training Seminar

Organizing Committee:

Denise Van Vanregemorter (KU Leuven),
Ernõ Zalai and
Tamás Révész (Corvinus University of Budapest)

CGE Model

The GEM-E3 General Equilibrium Model for Energy-Economy-Environment interactions has been developed as a multinational collaboration project, partly funded by the Commission of the European Communities, DG Research, 5th and 6th Framework programme and by national authorities. Applications of the model have been carried out for several Directorate Generals of the European Commission (economic affairs, competition, environment, taxation, research) and for national authorities.

The GEM-E3 (World and Europe) model is an applied general equilibrium model, simultaneously representing 25 European countries, linked through endogenous bilateral trade. GEM-E3 aims at covering the interactions between the economy, the energy system and the environment.

The model has the following general features:

1. It scope is general in two terms: it includes all simultaneously interrelated markets and represents the system at the appropriate level with respect to geography, the sub-system (energy, environment, economy) and the dynamic mechanisms of agent’s behaviour.
2. It formulates separately the supply or demand behaviour of the economic agents which are considered to optimise individually their objective while market derived prices guarantee global equilibrium
3. It considers explicitly the price formation in the energy, environment and economy markets: prices are computed by the model as a result of supply and demand interactions in the markets and different market clearing mechanisms, in addition to perfect competition, are allowed
4. The model is simultaneously multinational and specific for each country; country/region-specific policies and distributional analysis are supported
5. The model exhibits a sufficient degree of disaggregation concerning sectors, structural features of energy/environment and policy-oriented instruments (e.g. taxation).
6. The model is dynamic, recursive over time. Technology progress is explicitly represented in the production function.
7. The model formulates pollution permits for atmospheric pollutants and flexibility instruments allowing for a variety options, including: allocation (grandfathering, auctioneering, etc.), user-defined bubbles for traders, various systems of exemptions, various systems for revenue recycling, etc.

Purpose and objective of the workshop

The objective of this workshop is to increase the capacity in multisectoral modelling for economic policy analysis in the New Member States,. General equilibrium theory and especially computable GE models as applied to policy analysis have not been part of curricula or practice in the former planned economies having joined the EU, and that leads also to moderate interest in using such models for economic policy analysis. The project seeks to spread CGE modelling related expertise in the New Member States. The team at CUB has gained unique experience in the New Member States in building up specific CGE models, collecting the necessary data for them and using the models for policy simulations. They are especially aware of the needs of how to convert the skills of modelling experts in those countries, potentially interested to acquire the CGE modelling techniques.

Targeted audience:

The organizers are seeking applications from economic policy analysists, doctoral students, research assistants, primarily from newly accessed EU Member States in East-Central Europe, interested in applied multisectoral economic modelling to participate in the 3-days seminar and workshop.

Closing date for applications:

until 22 May 2008

How to apply:

Applications should be submitted in English. Candidates should submit a detailed curriculum vitae, a letter of motivation and a list of relevant written work or academic paper, if any. Candidates should also indicate if they need financial support.

Financial and organizational arrangement:

• 8-10 participants will be selected by the organizing committee
• there is no participation fee
• 6-7 stipends are made available to partially support candidates (local and/or travel cost) coming from East-Central European countries

Expected date for admittance decisions:

latest by 26 May 2008 (early applicants may recieve confirmation earlier)

For further information

please write to Prof. Ernõ Zalai (e-mail: erno.zalai@uni-corvinus.hu).

Mailing address:
Prof. Ernõ Zalai, Corvinus University Budapest
Department of Mathematical Economics and Economic Analysis
1093 Budapest, Fõvám tér 8., Hungary
Tel/Fax: 482-5029

Programme

1. Introduction
2. Salient Models of General Equilibrium
   (from the Walras–Cassel model to Johansen’s model of computable general equilibrium)
3. Applied multisectoral models: A comparative review
   (input output models, optimal resource allocation models, optimum versus equilibrium and the main building blocks of the CGE models)
4. The specific features of the GEM-E3 core model
   (representative economic agents, demand and supply of goods, equilibrium pricing identities, income distribution, model calibration and application)
5. Extentions of the GEM-E3 core models
   (environmental module, multiple households)
6. Statistical background of the GEM-E3 model
   (sources of the primary data, data processing methods and estimation of missing data)
7. Compilation of the database for the GEM-E3 model: The example of Hungary (I-O table and the Social Accounting Matrix, investment, consumption and trade matrices, energy and emission parameters)
8. Implementation of the GEM-E3 model: The GAMS software
9. Scenario writing, policy simulations and analysis, reporting the results

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Most recent update: May 22, 2008