gemTwoCountryPureExchange_Bond {GE}

Some Examples of Two-Country Pure Exchange Economy with Bond

Description

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

Usage

gemTwoCountryPureExchange_Bond(...)

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 <- 1
# the amount of outbound investment corresponding to each unit of consumption
outbound.investment.rate <- 0.1

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

dst.USA <- Clone(dst.consumption)

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

ge <- sdm2(dstl,
  names.commodity = c("lab.CHN", "lab.USA", "bond.USA"),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 3, 2, TRUE),
  S0Exg = matrix(c(
    100, 0,
    0, 100,
    0, 100
  ), 3, 2, TRUE),
  numeraire = "lab.CHN"
)
ge$p[2]

#### Add currencies to the example above.
es.DFProd <- 0.8
technology.level.CHN <- 1
outbound.investment.rate <- 0.1
interest.rate <- 1e-4

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("CHN",
  type = "FIN",
  rate = c(
    1, outbound.investment.rate,
    outbound.investment.rate * interest.rate
  ),
  "consumption", "bond.USA", "money.USA"
)
node_set(dst.CHN, "consumption",
  type = "SCES", alpha = 1, beta = c(0.5, 0.5), es = es.DFProd,
  prod_money.CHN, prod_money.USA
)

node_plot(dst.CHN)

dst.USA <- Clone(node_set(dst.CHN, "consumption"))
node_plot(dst.USA)

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

ge <- sdm2(dstl,
  names.commodity = c(
    "lab.CHN", "money.CHN",
    "lab.USA", "money.USA",
    "bond.USA"
  ),
  names.agent = c("CHN", "USA"),
  B = matrix(0, 5, 2, TRUE),
  S0Exg = matrix(c(
    100, 0,
    100, 0,
    0, 100,
    0, 100,
    0, 100
  ), 5, 2, TRUE),
  numeraire = c("money.CHN" = interest.rate)
)

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