PEP Standard CGE Models

The Modelling and Policy Impact Analysis (MPIA) program assists developing country researchers in constructing models of their national economy to simulate the impact of macroeconomic shocks/policies on various dimensions of poverty and welfare. To do so, it applies a combination of macro-micro modelling and simulation techniques including, for the macroeconomic level approach, a Computable General Equilibrium (CGE) framework. CGE models account for the structural aspects of a country’s economy, i.e. the interactions among sectors and institutions, and their links with the global economy.

In recent years, however, MPIA leaders came to find that there was a need for reference models that were more elaborate and closer to real-life conditions than the ones that had been used so far. Moreover, policymakers face new challenges that call for impact assessments that look both forward in time and beyond national boundaries, to the global economy. And so lead researchers of the MPIA program (Bernard Decaluwe, Andre Lemelin, Helene Maisonnave, Veronique Robichaud) have devoted time and energy to creating a series of new standard CGE models that can respond to these needs.
 

Bernard Decaluwé
Professor
Department of Economics,
Université Laval

Québec, Canada.

André Lemelin
Professor. INRS-UCS  Research Center
Montréal, Canada

(INRS is a constituent of the
Université du Québec)

Véronique Robichaud
Resource Person
PEP-Université Laval

Hélène Maisonnave
MPIA program coordinator
Professor, Université du Havre
Le Havre, France

Logo Le Havre

The growing family of PEP standard CGE models


The first of these models, PEP 1-1, designed for country-level studies, was developed as an operational tool for researchers to easily adapt a relatively standard model to their national economy. Building on this basic model, PEP 1-t was created to include evolution in time. Technically speaking, PEP 1-t is a «recursive dynamic» version of PEP 1-1 (which is a static or single-period model): it extends the analysis to multiple periods, linking each one to the past through variables inherited from the previous period. 

Since the beginning of 2011, no less than 3 new PEP standard CGE models have been put online. PEP-w-1 is a single-period WORLD model and PEP-w-t is its recursive dynamic version. These new models are based on the Global Trade Analysis Project (GTAP) world-level data base. The latest innovation of the PEP-MPIA team is PEP-w-t-fin, which is, to our knowledge, the only recursive dynamic world model that includes international financial assets.

Free public access under a Creative Commons license

All of these models are truly «open source»: free public access is available via the links below. Each model is fully documented and all the relevant programs are freely accessible. Better still, with the kind permission of GTAP, a 14-region, 4-commodity, aggregated database is also made available to calibrate the new world models. PEP is proud to offer the international modelling community, models that are not only fully operational for applied studies, but also perfectly suitable for training. Indeed, the MPIA team has made painstaking efforts to produce documentation that is complete, including references to theoretical underpinnings and detailed mathematical developments that link model equations and calibration procedures with the theory. For detailed information on each model and access to related tools and files, follow the links below:

---

PEP-1-1 (SINGLE-COUNTRY, STATIC VERSION)
2.1 version

Bernard Decaluwé, André Lemelin, Véronique Robichaud, Hélène Maisonnave

The PEP-1-1 model (1 period – 1 country) is the first major output of a project that emerged spontaneously from the long-standing association between the co-authors. They propose a static computable general equilibrium (CGE) model designed for the study of a national economy and intended to be an operational tool for PEP researchers and other users. With it, researchers will be able to develop a relatively standard model, and easily apply it to their country, whatever the particular structure of their social accounting matrix (SAM). Quoting the co-authors:

PEP-1-1 is to be our basis, from which to further deepen our understanding of CGE analysis and develop modeling techniques that will tackle new problems. But, both in sharing our experience and exploring new paths, we want to remain in the realm of operational model building. So our intentions are all at once pedagogical, experimental, and practical.

The present model differs significantly from Decaluwé, Martens and Savard’s EXTER model, which has been used extensively in the past by PEP researchers who had been trained in one of the many modeling “Schools” held over the years in many parts of the world. In many respects, the PEP-1-1 model is richer than the more pedagogical EXTER.

First, the PEP-1-1 model distinguishes several categories of workers and of capital. Also, PEP-1-1 is capable of taking into account a broader set of tax instruments, and it models all possible transfers between institutions (agents). Finally, the GAMS code, presented in a separate document, has been written in a general form, thanks to the use of sets. This will facilitate the application of PEP-1-1 to variously aggregated SAMs, by means of a few simple steps to make the SAM directly readable into the GAMS program.

Readers are invited to send their comments to André Lemelin at the following address: andre_lemelin@ucs.inrs.ca

Click here to download to obtain PEP-1-1 GAMS code, user guide, debugator and ppt presentation

---

PEP-1-t (SINGLE-COUNTRY, RECURSIVE DYNAMIC VERSION)
2.1 version

Bernard Decaluwé, André Lemelin, Véronique Robichaud, Hélène Maisonnave

The PEP-1-t model follows the PEP-1-1 single-country, single-period model. It is a recursive dynamic model, the second research tool of the Standard PEP Model project that emerged spontaneously from the long-standing association between the co-authors. With this model, we pursue the goals that we had initially set ourselves: to crystallize our joint CGE modeling experience, and to share the result with the PEP MPIA Network, and with the modeling community at large. In addition, PEP-1-t is one step towards a deepening of our understanding of CGE analysis and the development modeling techniques that will tackle new problems. We nonetheless persist in wanting to remain in the realm of operational model building. In that respect, we are fortunate that three members of the team have been involved in a Unicef-Financial and Fiscal Commission project set up to analyse the impact of the crisis on child poverty in South Africa. This was an opportunity to apply a version of PEP-1-t adapted to the South African context and the project objectives. The adapted model was subjected to extensive maltreatment; that flushed out a few bugs which we promptly corrected. In the end, all were quite happy with the model’s performance. As usual, we have tried to eliminate as many errors and « misprints » as possible in this document. Needless to say, we welcome comments that will help us improve either the model or its presentation.

Readers are invited to send their comments to André Lemelin at the following address: andre_lemelin@ucs.inrs.ca

Click here to download to obtain PEP-1-t GAMS code, user guide,  debugator and ppt presentation

---

PEP-w-1 (MULTI‐REGION, SINGLE‐PERIOD WORLD MODEL)
4.0 version

André Lemelin, Véronique Robichaud, Bernard Decaluwé and Hélène Maisonnave

This paper documents the PEP-w-1 model developed by four members of the PEP research network. The PEP-w-1 model extends the PEP-1-1 single-country, single-period model to a worldwide multiregional model. It is the third research tool of the Standard PEP Model project that emerged spontaneously from the friendship and long-standing association between the co-authors. With this model, we pursue the goals that we had initially set ourselves: to crystallize our joint CGE modeling experience, and to share the result with the PEP MPIA Network, and with the modeling community at large. In addition, PEP-w-1 is another step towards a deepening of our understanding of CGE analysis and the development modeling techniques that will tackle new problems. In a sense, however, PEP-w-1 is a transitional model, a stepping stone towards the recursive dynamic PEP-w-t, and its successor PEP-w-t-fin, with international financial assets.

NEW VERSION! Version 4.0 replaces version 3.3. Changes from the previous version are considerable. First of all, PEP-w-1 version 4.0 uses the GTAP 8.1 database, whereas version 3.3 used GTAP 7. Other significant modifications include changes in the model itself and changes in the parametrization procedure. In several instances, formulations in the GAMS code were also altered to clarify, uniformize and streamline the code. The interested user will find details in the “What’s new in version 4.0?” section of PEP-w-1 v4.0.pdf below.

The authors wish to thank the Global Trade Analysis Project (GTAP: www.gtap.agecon.purdue.edu) for granting us permission to distribute our 14 region, 4 industry aggregation of the GTAP 8.1 data base. As usual, we have tried to eliminate as many errors and « misprints » as possible in this document. Needless to say, we welcome comments that will help us improve either the model or its presentation.

Readers are invited to send their comments to André Lemelin at the following address: andre_lemelin@ucs.inrs.ca

Click here to download to obtain PEP-w-1 GAMS code and user guide

---

PEP-w-t (MULTI‐REGION, RECURSIVE DYNAMIC WORLD MODEL)
4.1 version

Véronique Robichaud, André Lemelin, Bernard Decaluwé and Hélène Maisonnave

The PEP-w-t model extends the PEP-w-1 worldwide multiregional model to a recursive dynamic model. Its dynamics is similar to the dynamics of PEP-1-t, insofar as the GTAP database permits. PEP-w-t is the fourth research tool of the Standard PEP Model project that emerged spontaneously from the friendship and long-standing association between the co-authors. With this model, we pursue the goals that we had initially set ourselves: to crystallize our joint CGE modeling experience, and to share the result with the PEP MPIA Network, and with the modeling community at large. In addition, PEP-w-t is another step towards a deepening of our understanding of CGE analysis and the development modeling techniques that will tackle new problems.     

NEW, UPDATED VERSION!

Version 4.1 replaces versions 4.0 and 1.4. PEP-w-t version 4.1 uses the GTAP 8.1 database. Changes since version 1.4 have been considerable. With respect to version 4.0, version 4.1 is an update. For that reason, the version 4.0 document remains valid and has not been replaced. But we urge users to take a look at the document entitled “The PEP standard multi-region, recursive dynamic world CGE model: Update, with a reference scenario”.     

The authors wish to thank the Global Trade Analysis Project (GTAP: www.gtap.agecon.purdue.edu) for granting us permission to distribute our 14 region, 4 industry aggregation of the GTAP 8.1 data base.    
As usual, we have tried to eliminate as many errors and « misprints » as possible in this document. Needless to say, we welcome comments that will help us improve either the model or its presentation.

Readers are invited to send their comments to André Lemelin at the following address: andre_lemelin@ucs.inrs.ca

Click here to download to obtain PEP-w-t GAMS code and user guide

---

PEP-w-t-fin (RECURSIVE DYNAMIC WORLD MODEL WITH INTERNATIONAL FINANCIAL ASSETS)
4.1 version

André Lemelin, Véronique Robichaud, Bernard Decaluwé

The PEP-w-t-fin model extends the PEP-w-t recursive dynamic world model to take into account international financial assets. PEP-w-t-fin is the fifth research tool of the Standard PEP Model project that emerged spontaneously from the friendship and long-standing association between the co-authors. With this model, we pursue the goals that we had initially set ourselves: to crystallize our joint CGE modeling experience, and to share the result with the PEP MPIA Network, and with the modeling community at large. In addition, PEP-w-t-fin is another step towards a deepening of our understanding of CGE analysis and the development modeling techniques that will tackle new problems.    

PEP-w-t-fin has already been applied to examine some implications of the 2008-2011 financial and economic crisis. Preliminary results have been presented at the Thirteenth Annual Conference on Global Economic Analysis, Penang, Malaysia, 9-11 juin 2010 (Lemelin et al., 2010). The model has also been the object of an article in Economic Modelling (Lemelin et al., 2013).    

NEW VERSION!

Version 4.1 replaces all previous versions of our model with financial assets, and it introduces considerable changes, in addition to be based on the GTAP 8.1 database. Like PEP-w-t-fin2, version 4.1 of PEP-w-t-fin (we decided to drop the “2”) takes into account the bilateral structure of international financial assets, on the basis of constructed data.    

The authors wish to thank the Global Trade Analysis Project (GTAP: www.gtap.agecon.purdue.edu) for granting us permission to distribute our 14 region, 4 industry aggregation of the GTAP 8.1 data base.    
As usual, we have tried to eliminate as many errors and « misprints » as possible in this document. Needless to say, we welcome comments that will help us improve either the model or its presentation.

Readers are invited to send their comments to André Lemelin at the following address: andre_lemelin@ucs.inrs.ca

Click here to download to obtain PEP-w-fin GAMS code and user guide

---

PEP SAMBAL (simple computer program to balance a SAM)
1.0 version

André Lemelin, Ismaël Fofana et John Cockburn

The Modelling and Policy Impact Analysis (MPIA) program assists developing country researchers in constructing models of their national economy to simulate the impact of macroeconomic shocks/policies on various dimensions of poverty and welfare. To do so, it applies a combination of macro-micro modelling and simulation techniques including, for the macroeconomic level approach, a Computable General Equilibrium (CGE) framework. CGE models are usually built on the basis of data assembled in a Social Accounting Matrix (SAM), which needs to be balanced. On this page, modelers will find SAM-balancing tools which have been developed or adapted by PEP researchers.

SAMBAL is a simple computer program to balance a SAM. Computable general equilibrium modeling requires a consistent and coherent benchmark data set, usually organized in the form of a Social Accounting Matrix (SAM). These data generally come from quite diverse sources and correspond to different periods of time. As a result, they often present inconsistencies. SAMBAL makes it possible to reconcile this information in order to balance a SAM. The program minimizes the changes to the base data using one of two optimizing techniques, cross-entropy (the default) or least squares. The program is an attractive and easy alternative to the arbitrary and time-consuming manual and other haphazard methods sometimes used to balance SAMs.

    Click here to download to obtain SAMBAL

    ---

    GPCEMA  (GENERAL PURPOSE CROSS-ENTROPY MATRIX ADJUSTMENT)
    1.0 version

    André Lemelin

    GPCEMA stands for « General Purpose Cross-Entropy Matrix Adjustment ». The matrix adjustment program is based on the minimum information-gain principle (also known as minimum cross-entropy), as it has been extended to deal with negative entries by Junius and Oosterhaven (2003). In addition to handling standard matrix adjustment problems, the program automatically deals with situations where row sums, column sums, or both are constrained to zero. It is based on 
LEMELIN, André (2009), « A GRAS variant solving for minimum information loss », Economic Systems Research, 21(4), p. 399-408.

    Related resources include :

    Click here to download to obtain GPCEMA

    ---

    The global reach of PEP models

    As of April 2015, the family of PEP standard CGE models have been downloaded and used by 1373 researchers and policy analysts in 112 different countries around the world.

    Partners

    Funded by