Master « Economie de la mondialisation »
2nd Semester
Course « Applied General Equilibrium Modeling »
Mohamed Ali Marouani
Maître de conférences, Université Paris1-Panthéon-Sorbonne
Course content and objectives :
Applied general equilibrium modeling (AGEM) is one of the main tools of ex ante public
policy evaluation. AGE models are useful to run counterfactual experiments when
intersectoral or inter-agents linkages are at stake. The recent generation of computable general
equilibrium models deals with various subjects such as international trade, employment,
poverty and income distribution, pension reform and environmental policy.
The objectives of this hands-on seminar are to familiarize students with the basics of AGE
models, their database and the software General Algebraic Modeling Software (GAMS). They
will be trained on writing simple AGE programs in GAMS and modifying existing ones for
research purposes. They will also learn to analyze public policy with AGE models and to
interpret results from these models. A special focus will be put on labor market issues given
their sensitivity in globalization debates.
Duration: 18 hours
Outline
Lecture 1: The basics of applied general equilibrium modeling
 An overview of AGE models
 The main functional forms used in AGE models
Readings:
Burfisher, M.E. (2011), Introduction to Computable General Equilibrium Models, Cambridge
University Press, Cambridge.
Décaluwé B., Martens A., et Savard L. (2001), La politique économique du développement et
les modèles d'équilibre général calculables, Les Presses de L'Université de Montréal,
Montréal
Devarajan, S. and S. Robinson (2005), "The Influence of Computable General Equilibrium
Models on Policy." In Timothy Kehoe, T. N. Srinivasan and John Whalley, eds., Frontiers in
Applied General Equilibrium Modeling: Essays in Honor of Herbert Scarf. Cambridge:
Cambridge University Press.
Lecture 2: The database of AGE models
 An introduction to social accounting matrices (SAMs)
 Exercise: building a simple SAM
Readings:
Pradhan B.K. , M.R. Saluja, and S.K. Singh, (2006), Social Accounting Matrix For India
Concepts Construction And Applications, Sage Publications India, New Delhi.
Reinert, K. A. and D. W. Roland-Holst, (1997), Social Accounting Matrices, chapter four in
Applied Methods for Trade Policy Analysis: A Handbook J.F. Francois and K.A. Reinert eds,
Cambridge University Press, pp. 94-121.
Robilliard, A.S. and S. Robinson, (2003), "Reconciling Household Surveys and National
Accounts Data Using a Cross Entropy Estimation Method," Review of Income and Wealth,
Wiley Blackwell, vol. 49(3), pages 395-406, 09.
Lecture 3: An introduction to the GAMS software
 GAMS: the basics
 Exercise: Writing a simple AGE model in GAMS
Readings:
Löfgren, H., Harris, R.L. and Robinson, S., (2001), "A standard computable general
equilibrium (CGE) model in GAMS," TMD discussion papers 75, International Food Policy
Research Institute (IFPRI).
Rosenthal, R.E. (2011) A User's Guide Tutorial, GAMS Development Corporation,
Washington, DC, USA. (http://www.gams.com/dd/docs/bigdocs/GAMSUsersGuide.pdf)
Lecture 4: A focus on labor markets’ modeling
 The production function and labor demand block
 Labor supply and migration
 Wage-setting mechanisms and unemployment
Agénor, P.R, Izquierdo, A. and Jensen, H. T. (2007). Adjustment Policies, Poverty, and
Unemployment: The IMMPA Framework. Malden: Blackwell Publishing Inc.
Devarajan, S., H. Ghanem and K. Thierfelder (1997). "Economic Reform and Labor Unions:
A General- Equilibrium Analysis Applied to Bangladesh and Indonesia." The World Bank
Economic Review 11(1): 145-170.
Marouani, M.A. and D. Robalino (2011) “Assessing Interactions among education, social
insurance and labor market policies in Morocco”, Applied Economics, volume 44, Issue 24,
pp. 3149-3167.
Marouani, M.A. (2010), “More jobs for University Graduates: some policy Options for
Tunisia”, Applied Economics Letters, 1466-4291, volume 17, Issue 10, p.p 933 – 937.
Lecture 5: Extending the basic model in GAMS
In this lecture, students develop an extension of the basic model built in lecture 3. The
extensions could be related to the blocks developed in lecture 4, or could deal with other
issues such as trade policy modeling (this depends on students’ personal interests).
Francois, J and K. Reinert (eds.), (1997), Applied Methods for Trade Policy Analysis: A
Handbook. Cambridge University Press (UK).
Konan, D.E. And K.E. Maskus (2006), “Quantifying the impact of services liberalization in a
developing country,” Journal of Development Economics, Vol. 81, No. 1, October, 142-162.
Marouani, M.A. (2009), “Is the end of the MFA a threat?”, Review of Development
Economics, 13(1), pp. 99–110.
Lecture 6: Policy simulations and results’ interpretation
The models developed in the previous session are used to simulate policies. The results are
discussed with a focus on the main mechanisms behind the observed outcomes.