Introduction to Computable General Equilibrium (CGE) Modelling

BACKGROUND

Technological advancements combined with country-specific specialisation in the production of food and non-food commodities have accelerated the integration of developing countries into global markets. This has globalised commodity and factor supply chains. As a result, shocks in one country are increasingly having effects on the production and consumption patterns of another country. For instance, the post-COVID-19 effects and the Ukraine-Russia conflict have caused disruptive effects on the global supply chains in the global south, especially for industrial intermediate inputs. Such shocks have led to economic disruption of fiscal and monetary policies in the form of reduced tax collections, increased imported inflation, exchange rate depreciation pressures, and higher expenditure demands, thus causing increased fiscal deficits and debt accumulations. Such shocks have challenged the traditional forms of policy analysis, thus calling for complementary economy-wide tools that capture the backward and forward linkages between productive sectors and the subsequent links to labour markets, commodity markets, and institutions like government and enterprises. The Computable General Equilibrium (CGE) model captures these effects. It is against this background that MEFMI will conduct a course on Introduction to CGE Modelling using General Algebraic Modelling System (GAMS). The course will introduce participants to building and using a static CGE model for policy analysis.

OBJECTIVES

The objectives of the course are:

1. To create an understanding of the role of economy-wide modelling in policy analysis and guidance, especially amidst the global economic and geo-political shocks;

2. To develop the capacity of participants in building and using CGE models;

3. To develop skills of participants in the structure of the database for CGE models; focussing on the Macro – SAM; and

4. To equip participants with skills in calibrating and debugging CGE models.

CONTENT

The course will cover the following:

1. Introduction to economy-wide modelling and databases;

2. Economic modelling in GAMS software;

3. Step-by-step building of a CGE model in GAMS;

4. Modelling open and closed economies in CGE models;

5. Debugging CGE models; and 6. Policy analysis using CGE models.

TARGET GROUP

This targets junior to mid-level officials in the Ministries of Finance/Economic Planning, Central Bank, and Statistics officials responsible for economic modelling and policy analysis.