Most economics curricula deal with macroeconomic tools for studying the economy as a whole and microeconomic tools for studying the behaviour of individual agents or markets. However, many policies create costs and benefits that extend beyond the targeted sectors or agents.
Furthermore, the impacts on the policy targets are themselves conditioned by the macroeconomic adjustment processes and the structures and institutions of the economy in which they are implemented. Practical public and private sector policy analysts thus often need an economy-wide perspective on the policies they design, implement and monitor.
Economic modelling techniques that capture these economy-wide impacts are increasingly being used in policy, consulting, research and academic environments. Input-output and social accounting matrix (SAM) analysis are used on a regular basis to analyse the impact of policy-related and other changes on the economy. Computable general equilibrium (CGE) models build on these techniques to allow for a wide range of behavioural responses and interactions. While these techniques were once the preserve of a handful of leading theoreticians, the IT revolution has allowed them to become part of the practical economist's everyday toolkit.
In 2001 Trade and Industrial Policy Strategies (TIPS) started (co-)presenting introductory workshops to cater for the rising demand for these techniques. Since then it has held more than thirty such workshops, with more than 500 participants from over 30 countries.
The accumulated experience of running these workshops suggests that there are three different kinds of model users, each requiring different skills. Firstly, modellers need the skills to adapt existing models for new applications and to develop new models completely. Secondly, many policy analysts need to use economy-wide models routinely in their work.
They may want to run and interpret the results of standard models dealing with their specific issues. They also may want to be able to interact with modellers when commissioning work from them. Finally, while never needing to run models themselves, many senior policy managers draw on modelling work undertaken by consultants and others. They need to know when the methods are appropriate and to be able to interrogate the results properly.
TIPS has evolved a suite of three related introductory workshops designed to meet these different needs. All three workshops focus on learning by doing. Brief presentations introduce the various topics, after which participants do hands-on exercises implementing what they have learned. There is also emphasis on the nature of the data underlying the models. Participants undertake projects dealing with typical issues, using real world data.
The first of these three workshops, Economy-Wide Policy Impact Analysis, is suitable for all three of kinds of users mentioned above. It introduces participants to input-output, SUT and SAM multiplier analysis and their extensions. These techniques are widely used to assess the likely impact of policy and other shocks to the economy. They can also form the basis for many CGE models. All the models are implemented in MS Excel.
The second workshop, Introduction to Economy-Wide Modelling for Policy Analysis, targets primarily managers and policy analysts, although it is also useful for those wishing to become modellers who want to get a taste of what it is like. It introduces participants to the key components of standard CGE models, emphasising how to use economy-wide models and the economic interpretation of their outputs, rather than the techniques of building them. The models are run using a specially developed MS Excel interface with specialised modelling software.
Finally the third workshop, Introduction to Computable General Equilibrium modelling using GAMS, specifically targets those wanting to become modellers. It introduces the participants to economy-wide model building, using specialised modelling software. While the material is driven by the economics of models, the major focus is on actual model building techniques. This workshop does not require prior knowledge of model building, but is technically more difficult than either of the other two workshops. Workshop B or equivalent is considered to be a prerequisite to participate.
The different aspects of the three workshops are summarised in Table 1. The precise content of each workshop is varied from time to time, to meet needs of specific participants and as the field evolves. Schematic outlines of the programmes are presented in Table 2.
Who should attend
Workshop A: Economy-Wide Policy Impact Analysis is suitable for senior policy managers, policy analysts and intending modellers.
Workshop B: Introduction to Economy-Wide Modelling for Policy Analysis is also suitable for senior policy managers, policy analysts and intending modellers.
Workshop C: Introduction to Computable General Equilibrium modelling using GAMS is suitable for intending modellers.
No pre-reading is required for any of these workshops and all necessary materials will be provided for the course. However, interested participants may wish to consult the following references as preliminary reading.
Suggested readings
Workshop A
Jeffrey Round 2003 "Social Accounting Matrices and SAM-based Multiplier Analysis" Chapter 14 in L A Pereira da Silva and F Bourguignon (editors) Techniques for Evaluating the Poverty Impact of Economic Policies, World Bank and Oxford University Press, September 2003. http://siteresources.worldbank.org/INTPSIA/Resources/490023-1121114603600/14017chapter14.pdf
Workshops B and C
Lofgren, H; Harris, DL & Robinson, S, 2002, A Standard Computable General Equilibrium (CGE) Model in GAMS, Microcomputers in Policy Research 5, http://www.ifpri.org/publication/standard-computable-general-equilibrium-cge-model-gams-0
Lofgren, H, 2003, Exercises in general equilibrium modeling using GAMS and key to exercises in CGE modeling using GAMS, Microcomputers in Policy Research 4a, http://www.ifpri.org/publication/exercises-general-equilibrium-modeling-using-gams-and-key-exercises-cge-modeling-using
TABLES: WORKSHOP SUMMARIES AND SCHEMATIC PROGRAMMES FOR WORKSHOPS
Table 1: Workshop Summaries
| |
|
Who Should Attend |
Skills required |
Technical content |
Pre-requisites (apart from Economics) |
| A |
Economy-Wide Policy Impact Analysis |
- Senior Policy Managers
- Policy Analysts
- Intending Modellers
|
|
|
|
| B |
Introduction to Economy-Wide Modelling for Policy Analysis |
- Senior Policy Managers
- Policy Analysts
- Intending Modellers
|
- Familiarity with Excel
- Sufficient background in quantitative methods not to be put off by algebraic expressions
|
|
|
| C |
Introduction to Computable General Equilibrium modelling using GAMS |
|
- Workshop B or equivalent workshops elsewhere.
- Ability to manipulate and interpret algebraic expressions
|
|
|
Table 2: Schematic Programmes for Workshops (subject to change)
| |
A |
B |
C |
| |
Economy-Wide Policy Impact Analysis |
Introduction to Economy-Wide Modelling for Policy Analysis |
Introduction to Computable General Equilibrium modelling using GAMS |
| Day 1 |
- Intro to workshop and economy-wide impact analysis
- Intro to SU tables
- The SUT multiplier model
|
- Introduction to workshop
- Introduction to economy-wide modelling
- The SAM as a CGE data base
- A simple CGE
|
- Introduction to Computable General Models
- Modelling with GAMS
- Partial equilibrium models in GAMS
|
| Day 2 |
- The SUT supply constrained multiplier model
- The SUT price model
|
- Introducing intermediates, macroeconomics, non-homogenous factor markets and unemployment
|
- A simple CGE
- Introducing intermediates, macroeconomics, non-homogenous factor markets and unemployment
|
| Day 3 |
- Intro to SAMs
- SAM multipliers
|
- Adding government and the rest of the world
|
- Adding government and the rest of the world
- Lectures on special topics in CGE
|
| Day 4 |
- Regional SAMs
- Mini projects
|
- Using the IFPRI standard model
- Applying the IFPRI model and mini-projects
|
- Using the IFPRI standard model
- Applying the IFPRI model and simulations
|
| Day 5 |
- Project presentations
- Moving Forward
|
- Presentation of mini-projects
- Moving forward
|
- Conducting and discussing simulations
- Moving forward
|
