The PROVIDE Project Standard Computable General Equilibrium ...

PROVIDE Project Technical Paper 2003: 3 October 2003
−eta c
⎛ PWEc
⎞
QEc
= econc
* ⎜ ⎟
∀ced
⎝ pwsec
⎠
for which the export demands are defined by constant elasticity export demand functions, with
constants (econ), elasticities of demand (eta) and prices for substitutes on the world market
(pwse).
3.4. Income Block Equations
There are seven equations in the income block; in each case the equations are defined from the
perspective of income received by institutional accounts.
There are two sources of income for factors. First there are payment to factor accounts for
services supplied to activities, i.e., domestic value added, and second there are payments to
domestic factors that are used overseas, the value of these are assumed fixed in terms of the
foreign currency. Factor incomes (YF) are therefore defined as the sum of all income to the
factors across all activities (Y1)
YF ⎛
⎞
f
= ⎜∑ WFf * WFDIST
f , a* FDf , a⎟+
( factworf
* ER)
. (Y1)
⎝ a
⎠
Before distributing factor incomes to the institutions that supply factor services allowance is
made for depreciation (deprec) and factor taxes (tf) so that factor income for distribution
(YFDISP) is defined (Y2) as
( )*1 ( ( * ))
f f f f
(T9)
YFDISP = YF −deprec − TFADJ tf . (Y2)
Households receive income from a variety of sources (Y3). Factor incomes are distributed
to households as fixed proportions (hovash) of the distributed factor income for all factors
owned by the household, plus interhousehold transfers (HOHO), payments from enterprises
(hoentconst), transfers from government (hogovconst) that are adjustable using a scaling
factor (HGADJ) and transfer from the rest of the world (howor) converted into domestic
currency units, i.e.,
⎛ ⎞ ⎛ ⎞
YHh = ⎜∑hovashh, f
* YFDISPf ⎟+
⎜∑HOHOh,
hp⎟
⎝ f
⎠ ⎝ hp ⎠ . (Y3)
+ hoentconst + hogovconst HGADJ + howor ER
( * ) ( * )
h h h
Similarly, income to enterprises (Y4) comes from the share of distributed factor incomes
accruing to enterprises (entvash) and transfers from government (entgovconst) that are
adjustable using a scaling factor (EGADJ) and the rest of the world (entwor) converted in the
domestic currency units, i.e.,
© S. McDonald
24