Elements of a CGE Model

1. Elements of a CGE Model Self-Assessment

2. How to Do the Self-Assessment • View the presentation as a slide show. • Move your cursor over the bottom left corner of the page to display navigation buttons. • Follow the instructions to select or write your answers. • Click on the right-arrow in the lower left corner to view the correct answer. • After completing a question and viewing the answer, click on the right-arrow to move to the next question. • Click on the left-arrow in the lower left corner to return to the previous question.

3. True or False Questionsclick on your answer

4. The initial value of an exogenous variable does not change following a model experiment.

5. A model experiment entails: • changing one or more exogenous variables, • solving the model, and • comparing the new model results with the calibrated, base model solution.

6. An elasticity parameter can be changed as a model experiment.

7. The model calibration procedure calculates the shift and share parameters of supply and demand equations so that, with the given elasticities, the equations replicate the balanced, base year data.

8. The price of a good differs along the supply chain between producers and consumers due to taxes, transport costs and price normalization.

9. Multiple Choice Questionsclick on your answer

10. FOB export prices include sales taxes. include import tariff charges. include trade and transport margins. exclude trade and transport margins.

11. A factor mobility elasticity describes factors’ willingness to change employment as relative wages change across industries. describes the supply side of factor markets. affects industries’ shares in the employment of a factor. All of the above.

12. Macro closure describes: production decisions about inputs and output levels, which determine the aggregate level of economic output. the modeler’s identification of all of the variables in the model that are exogenous. whether aggregate factor supplies are assumed to be fixed or endogenous. which of the two variables – savings or investment – will adjust to maintain the identity that savings equals investment.

13. The shift parameter in the model’s production function is usually assumed to be zero. is typically an endogenous variable in CGE models. is provided by the modeler as an input into the model calibration procedure. is a calibrated parameter that describes factor productivity and can be modified in an experiment.

14. Model calibration replicates the initial equilibrium data base. requires an initial equilibrium data base (SAM) and elasticity parameter values. calculates the shift and share parameters used in the production and utility functions. All of the above.

15. A model numeraire fixes one or more prices, which makes the model “square,” with the same number of variables and equations. is an endogenous variable whose value changes as a result of experiments. must be defined as a CPI or PPI, otherwise models’ price and quantity results will be affected. is a price that remains fixed at its initial level and serves as a benchmark against which changes in all other prices are measured.

16. A normalized price is the regular price, after the store-wide sale is over. allows the base data, expressed in value terms, to be interpreted as the quantity per $1 (or one unit of any currency). reduces database requirements to value data alone, while allowing the model to generate results for quantities, prices and values. Both B and C.

17. Matching ProblemsClick on the pen in the lower left corner and use it to draw a line that show a match between two concepts

18. Match the elasticity to the outcome: Factor substitution Import substitution Export supply Factor supply Export demand Exporter’s world market share Export share in production Factors’ shares in production Import share of consumption Factor employment by industry

19. Match the prices for country r, good i: Producer price World export price FOB export price Consumer price CIF import price Exporter fob price plus insurance and freight Producer price plus export tax or subsidy Received by producer, includes production tax or subsidy Trade-weighted sum of bilateral fob export prices Producer price plus sales tax (domestic good); cif price plus sales tax and import tariff (imported good)

20. Congratulations! You have completed the CGE Cloud ClassroomSelf-Assessment on ELEMENTS OF A CGE MODEL _______ Dated

21. Please provide your feedback by taking this brief survey. Click here for the survey.