Economic Equilibrium Modeling with GAMS

10
Work space allocated -- 4.86 Mb
Default price normalization using income for RA
This information is largely self-explanatory. The most important items are the SOLVER
STATUS and MODEL STATUS indicators. When the solver status is 1 and the model status
is 1, the system has returned an equilibrium.
For small models such as this, the limits on resource usage (time) and solver iterations
have no e ect. You can modify these values by adding statements \model.RESLIM =
number of cpu seconds;" and \model.ITERLIM = number of iterations;" before the SOLVE
statement.
The work space allocation for MPSGE models is determined by the number of variables
in the model. It is possible to exogenously specify the work space allocation by assigning
model.WORKSPACE = xx; where xx is the desired number of megabytes.
The nal message, \Default price normalization..." reminds the user that an
Arrow-Debreu general equilibrium model determines only relative prices. In such anequilibrium,
the absolute scaling of prices is indeterminant. (I.e., if (p ;M ) are a set of
equilibrium prices and income levels, then (2p ; 2M ) is also a solution, etc.)
It is common practice in economics to address the normalization issue through the
speci cation of a numeraire commodity. You can do this for an MPSGE model by \ xing"
a price, with a statement like: \PX.FX = 1;" entered following the model declaration
($SYSINCLUDE mpsgeset) but prior to the solver invocation. When any price or income
level is xed, MPSGE recognizes that a numeraire has been speci ed and does no automatic
normalization.
Following some output from the solver (PATH in this case), the listing le provides
a complete report of equilibrium values. With MPSGE models, the equation listings are
super uous. The variable listings provide all the relevant information.