gemTwoCountryPureExchange {GE}

Some Examples of Two-Country Pure Exchange Economy

Description

Some general equilibrium examples of two-country pure exchange economy.

Usage

gemTwoCountryPureExchange(...)

Arguments

...

arguments to be passed to the function sdm2.

Value

A general equilibrium.

Examples

es.DFProd <- 0.8 # substitution elasticity between domestic and foreign products
technology.level.CHN <- 0.9

dst.CHN <- node_new("util",
  type = "SCES", alpha = 1, beta = c(0.5, 0.5), es = es.DFProd,
  "prod.CHN", "prod.USA"
)
node_set(dst.CHN, "prod.CHN",
  type = "Leontief", a = 1 / technology.level.CHN,
  "lab.CHN"
)
node_set(dst.CHN, "prod.USA",
  type = "Leontief", a = 1,
  "lab.USA"
)
node_plot(dst.CHN)

dst.USA <- Clone(dst.CHN)

dstl <- list(dst.CHN, dst.USA)

ge <- sdm2(dstl,
  names.commodity = c("lab.CHN", "lab.USA"),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 2, 2, TRUE),
  S0Exg = matrix(c(
    100, 0,
    0, 100
  ), 2, 2, TRUE),
  numeraire = "lab.CHN"
)
ge$p[2]
# the same as above
technology.level.CHN^(1 / es.DFProd - 1)

## supply change
geSC <- sdm2(dstl,
  names.commodity = c("lab.CHN", "lab.USA"),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 2, 2, TRUE),
  S0Exg = matrix(c(
    200, 0,
    0, 100
  ), 2, 2, TRUE),
  numeraire = "lab.CHN"
)
geSC$p[2]

## preference change
dst.CHN$beta <- c(0.6, 0.4)
gePC <- sdm2(dstl,
  names.commodity = c("lab.CHN", "lab.USA"),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 2, 2, TRUE),
  S0Exg = matrix(c(
    100, 0,
    0, 100
  ), 2, 2, TRUE),
  numeraire = "lab.CHN"
)

gePC$p[2]

#### Add currencies to the example above.
interest.rate <- 1e-4
es.DFProd <- 0.8
technology.level.CHN <- 0.9

prod_money.CHN <- node_new("prod_money.CHN",
  type = "FIN", rate = c(1, interest.rate),
  "prod.CHN", "money.CHN"
)
node_set(prod_money.CHN, "prod.CHN",
  type = "Leontief", a = 1 / technology.level.CHN,
  "lab.CHN"
)

prod_money.USA <- node_new("prod_money.USA",
  type = "FIN", rate = c(1, interest.rate),
  "prod.USA", "money.USA"
)
node_set(prod_money.USA, "prod.USA",
  type = "Leontief", a = 1,
  "lab.USA"
)

dst.CHN <- node_new("util",
  type = "SCES", alpha = 1, beta = c(0.5, 0.5), es = es.DFProd,
  prod_money.CHN, prod_money.USA
)

dst.USA <- Clone(dst.CHN)

dstl <- list(dst.CHN, dst.USA)

ge <- sdm2(dstl,
  names.commodity = c(
    "lab.CHN", "money.CHN",
    "lab.USA", "money.USA"
  ),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 4, 2, TRUE),
  S0Exg = matrix(c(
    100, 0,
    100, 0,
    0, 100,
    0, 100
  ), 4, 2, TRUE),
  numeraire = c("money.CHN" = interest.rate)
)

ge$p["money.USA"] / ge$p["money.CHN"] # the exchange rate

#### supply change
geSC <- sdm2(dstl,
  names.commodity = c(
    "lab.CHN", "money.CHN",
    "lab.USA", "money.USA"
  ),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 4, 2, TRUE),
  S0Exg = matrix(c(
    200, 0,
    100, 0,
    0, 100,
    0, 100
  ), 4, 2, TRUE),
  numeraire = c("money.CHN" = interest.rate)
)
geSC$p["money.USA"] / geSC$p["money.CHN"]

## preference change
dst.CHN$beta <- c(0.6, 0.4)
gePC <- sdm2(dstl,
  names.commodity = c(
    "lab.CHN", "money.CHN",
    "lab.USA", "money.USA"
  ),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 4, 2, TRUE),
  S0Exg = matrix(c(
    100, 0,
    100, 0,
    0, 100,
    0, 100
  ), 4, 2, TRUE),
  numeraire = c("money.CHN" = interest.rate)
)

gePC$p["money.USA"] / gePC$p["money.CHN"]

#### the exchange rate under a high substitution elasticity
#### between domestic and foreign products.
interest.rate <- 1e-4
es.DFProd <- 3
technology.level.CHN <- 0.9

prod_money.CHN <- node_new("prod_money.CHN",
  type = "FIN", rate = c(1, interest.rate),
  "prod.CHN", "money.CHN"
)
node_set(prod_money.CHN, "prod.CHN",
  type = "Leontief", a = 1 / technology.level.CHN,
  "lab.CHN"
)

prod_money.USA <- node_new("prod_money.USA",
  type = "FIN", rate = c(1, interest.rate),
  "prod.USA", "money.USA"
)
node_set(prod_money.USA, "prod.USA",
  type = "Leontief", a = 1,
  "lab.USA"
)

dst.CHN <- node_new("util",
  type = "SCES", alpha = 1, beta = c(0.5, 0.5), es = es.DFProd,
  prod_money.CHN, prod_money.USA
)

dst.USA <- Clone(dst.CHN)

dstl <- list(dst.CHN, dst.USA)

ge <- sdm2(dstl,
  names.commodity = c(
    "lab.CHN", "money.CHN",
    "lab.USA", "money.USA"
  ),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 4, 2, TRUE),
  S0Exg = matrix(c(
    100, 0,
    100, 0,
    0, 100,
    0, 100
  ), 4, 2, TRUE),
  numeraire = c("money.CHN" = interest.rate)
)

ge$p["money.USA"] / ge$p["money.CHN"] # the exchange rate

## supply change and high substitution elasticity
geSC <- sdm2(dstl,
  names.commodity = c(
    "lab.CHN", "money.CHN",
    "lab.USA", "money.USA"
  ),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 4, 2, TRUE),
  S0Exg = matrix(c(
    200, 0,
    100, 0,
    0, 100,
    0, 100
  ), 4, 2, TRUE),
  numeraire = c("money.CHN" = interest.rate)
)
geSC$p["money.USA"] / geSC$p["money.CHN"]