gemTwoCountry_Bond_7_4 {GE}

An Example of Two-Country Economy with Bond

Description

A general equilibrium example of two-country economy with bond.

Usage

gemTwoCountry_Bond_7_4(...)

Arguments

...

arguments to be passed to the function sdm2.

Value

A general equilibrium.

See Also

gemTwoCountry_Tariff_9_5

Examples

es.DFProd <- 0.8 # the substitution elasticity between domestic and foreign products
es.CL <- 0.8 # the substitution elasticity between capital and labor

dst.firm.CHN <- node_new("output",
  type = "SCES", alpha = 1, beta = c(0.78, 0.22), es = es.CL,
  "lab.CHN", "cap.CHN"
)

dst.household.CHN <- node_new("util",
  type = "FIN", rate = c(1,  outbound.investment.rate = 0.028),
  "cc1", "bond.ROW"
)
node_set(dst.household.CHN, "cc1",
  type = "SCES", alpha = 1, beta = c(0.93, 0.07), es = es.DFProd,
  "prod.CHN", "prod.ROW"
)

node_plot(dst.household.CHN)

dst.firm.ROW <- node_new("output",
  type = "SCES", alpha = 1, beta = c(0.75, 0.25), es = es.CL,
  "lab.ROW", "cap.ROW"
)

dst.household.ROW <- node_new("util",
  type = "SCES", alpha = 1, beta = c(0.02, 0.98), es = es.DFProd,
  "prod.CHN", "prod.ROW"
)

dstl <- list(dst.firm.CHN, dst.household.CHN, dst.firm.ROW, dst.household.ROW)

ge <- sdm2(dstl,
  names.commodity = c(
    "prod.CHN", "lab.CHN", "cap.CHN",
    "prod.ROW", "lab.ROW", "cap.ROW", "bond.ROW"
  ),
  names.agent = c(
    "firm.CHN", "household.CHN",
    "firm.ROW", "household.ROW"
  ),
  B = {
    tmp <- matrix(0, 7, 4, TRUE)
    tmp[1, 1] <- tmp[4, 3] <- 1
    tmp
  },
  S0Exg = {
    tmp <- matrix(NA, 7, 4, TRUE)
    tmp[2, 2] <- 53 # the supply of lab.CHN
    tmp[3, 2] <- 15 # the supply of cap.CHN
    tmp[5, 4] <- 240 # the supply of lab.ROW
    tmp[6, 4] <- 77 # the supply of cap.ROW
    tmp[7, 4] <- 2 # the supply of bond.ROW
    tmp
  },
  numeraire = "lab.CHN"
)

ge$p
ge$z

# Determine the parameters in the
# example based on an input-output table.
IT <- matrix(c(
  0, 61.44, 0, 6.498,
  53, 0, 0, 0,
  14.94, 0, 0, 0,
  0, 4.647, 0, 320,
  0, 0, 242.9, 0,
  0, 0, 81.74, 0,
  0, 1.85, 0, 0
), 7, 4, TRUE)

OT <- matrix(c(
  67.94, 0, 0, 0,
  0, 53, 0, 0,
  0, 14.94, 0, 0,
  0, 0, 324.64, 0,
  0, 0, 0, 242.9,
  0, 0, 0, 81.74,
  0, 0, 0, 1.85
), 7, 4, TRUE)

dimnames(IT) <- dimnames(OT) <- list(
  c("prod.CHN", "lab.CHN", "cap.CHN", "prod.ROW", "lab.ROW", "cap.ROW", "bond.ROW"),
  c("firm.CHN", "household.CHN", "firm.ROW", "household.ROW")
)

es.DFProd <- 0.8 # the substitution elasticity between domestic and foreign products
es.CL <- 0.8 # the substitution elasticity between capital and labor

dst.firm.CHN <- node_new("output",
                         type = "SCES",
                         alpha = OT["prod.CHN", "firm.CHN"] /
                           sum(IT[c("lab.CHN", "cap.CHN"), "firm.CHN"]),
                         beta = prop.table(IT[c("lab.CHN", "cap.CHN"), "firm.CHN"]),
                         es = es.CL,
                         "lab.CHN", "cap.CHN"
)

# the amount of outbound investment corresponding to
# each unit of composite commodity 1 used by household.
outbound.investment.rate <- IT["bond.ROW", "household.CHN"] /
  sum(IT[c("prod.CHN", "prod.ROW"), "household.CHN"])

dst.household.CHN <- node_new("util",
                             type = "FIN",
                             rate = c(1, outbound.investment.rate),
                             "cc1", "bond.ROW"
)

node_set(dst.household.CHN, "cc1",
         type = "SCES", alpha = 1,
         beta = prop.table(IT[c("prod.CHN", "prod.ROW"), "household.CHN"]),
         es = es.DFProd,
         "prod.CHN", "prod.ROW"
)

dst.firm.ROW <- node_new("output",
                         type = "SCES", alpha = 1,
                         beta = prop.table(IT[c("lab.ROW", "cap.ROW"), "firm.ROW"]),
                         es = es.CL,
                         "lab.ROW", "cap.ROW"
)

dst.household.ROW <- node_new("util",
                             type = "SCES", alpha = 1,
                             beta = prop.table(IT[c("prod.CHN", "prod.ROW"), "household.ROW"]),
                             es = es.DFProd,
                             "prod.CHN", "prod.ROW"
)

dstl <- list(dst.firm.CHN, dst.household.CHN, dst.firm.ROW, dst.household.ROW)

ge <- sdm2(dstl,
  names.commodity = c(
    "prod.CHN", "lab.CHN", "cap.CHN",
    "prod.ROW", "lab.ROW", "cap.ROW", "bond.ROW"
  ),
  names.agent = c(
    "firm.CHN", "household.CHN",
    "firm.ROW", "household.ROW"
  ),
  B = {
    tmp <- matrix(0, 7, 4, TRUE)
    tmp[1, 1] <- tmp[4, 3] <- 1
    tmp
  },
  S0Exg = {
    tmp <- matrix(NA, 7, 4, TRUE)
    tmp[2, 2] <- OT["lab.CHN", "household.CHN"]
    tmp[3, 2] <- OT["cap.CHN", "household.CHN"]
    tmp[5, 4] <- OT["lab.ROW", "household.ROW"]
    tmp[6, 4] <- OT["cap.ROW", "household.ROW"]
    tmp[7, 4] <- OT["bond.ROW", "household.ROW"]
    tmp
  },
  numeraire = "lab.CHN"
)

ge$p
ge$z