The Food Security Portal E-learning Platform has launched two new courses: “General Equilibrium Models – an Introduction” and “Advanced General Equilibrium Models.”
Led by IFPRI Senior Researcher Antoine Bouet, these courses will introduce participants to computable general equilibrium (CGE) modeling, a powerful tool for analyzing a wide range of food policy issues at both the country and the global level.
The major advantage of CGE modeling lies in its flexibility. Because the model captures both the supply and the demand side of an economy, it can be adjusted to simulate a variety of economic policies and shocks, as well as a wide range of behavioral responses and interactions between different economic actors. This allows researchers to gain a more robust, economy-wide perspective on the impacts of different policies and potential shocks on both producers and consumers, as well as on the economy as a whole.
“Computable general equilibrium models are widely used as ex-ante tools in economy-wide policy analysis. CGE models have been used to quantify the potential allocation, employment, macroeconomic, and welfare impacts of different policy shocks, including technological change, public investment programs, trade policy reforms, climate and environmental changes,” says Betina Dimaranan, IFPRI Senior Research Coordinator and Coordinator of the Food Security Portal.
The introductory course starts by covering a CGE model’s basic principles using a simple illustration to show that equilibrium in one market depends on equilibrium in all other markets. Students will then learn about the structure and design of a social accounting matrix which is the basis of data for computable general equilibrium models. Social accounting matrices are used to record all economic transactions and transfers of income made within an economy during a one-year period. Finally, they will examine a simple example of a CGE model using three goods in order to better understand interactions between production and consumption. This course includes three units which include exercises and a final test.
The advanced course progressively introduces new economic agents toward a more complex CGE model. It first takes into account public administration (direct and indirect taxes and subsidies) before introducing households’ savings, followed by investments by firms, and finally the introduction of international trade (exports and imports). Students will analyze how these factors impact macroeconomic equilibrium accompanied by social accounting matrices which include sample data for each of the economic agents. The model developed in this course is relatively representative of the models used in economic research, allowing students to better understand how CGE models can be used by researchers and development practitioners. The advanced course consists of four units which include exercises and a final test.
Students should have experience with GAMS programs in order to successfully complete this course; GAMS training is offered through the AGRODEP GAMS Training Toolbox. In addition, all students are required to complete FSP’s course on “Partial Equilibrium Models” prior to enrolling in either CGE course.