# A Two-Country General Equilibrium Model A two-country general equilibrium model. This general equilibrium model is based on a two-country (i.e. CHN and ROW) input-output table consisting of an input part and an output part. Each country contains 4 sectors and 7 commodities (or subjects). The 4 sectors are production, consumption, investment and foreign trade. The 7 commodities (or subjects) are product, labor, capital goods, bond, tax, dividend, imported product. Hence the input-output table has 14 rows and 8 columns. ```r gemInputOutputTable_2_7_4( IT, OT, es.DIProduct.production.CHN = 3, es.DIProduct.production.ROW = 3, es.laborCapital.production.CHN = 0.75, es.laborCapital.production.ROW = 0.75, es.consumption.CHN = 3, es.consumption.ROW = 3, es.investment.CHN = 3, es.investment.ROW = 3, return.dstl = FALSE, ... ) ``` ## Arguments - `IT`: the input part of the input-output table. - `OT`: the output part of the input-output table. - `es.DIProduct.production.CHN`: the elasticity of substitution between domestic product and imported product used by the production sector of CHN. - `es.DIProduct.production.ROW`: the elasticity of substitution between domestic product and imported product used by the production sector of ROW. - `es.laborCapital.production.CHN`: the elasticity of substitution between labor and capital goods used by the production sector of CHN. - `es.laborCapital.production.ROW`: the elasticity of substitution between labor and capital goods used by the production sector of ROW. - `es.consumption.CHN`: the elasticity of substitution between domestic product and imported product used by the consumption sector of CHN. - `es.consumption.ROW`: the elasticity of substitution between domestic product and imported product used by the consumption sector of ROW. - `es.investment.CHN`: the elasticity of substitution between domestic product and imported product used by the investment sector of CHN. - `es.investment.ROW`: the elasticity of substitution between domestic product and imported product used by the investment sector of ROW. - `return.dstl`: If TRUE, the demand structure tree will be returned. - `...`: arguments to be transferred to the function `sdm2`. ## Returns A general equilibrium, which usually is a list with the following elements: * p - the price vector with CHN labor as numeraire. * dstl - the demand structure tree list of sectors if return.dstl == TRUE. * ... - some elements returned by the function `sdm2`. ## Examples ```r IT <- matrix(c( 30, 12, 9, 0, 0, 0, 0, 13, 15, 0, 0, 0, 0, 0, 0, 0, 2, 0, 0, 0, 0, 0, 0, 0, 0, 9, 0, 0, 0, 2, 0, 0, 3, 0, 0, 1, 0, 0, 0, 0, 6, 0, 0, 0, 0, 0, 0, 0, 8, 3, 3, 0, 0, 0, 0, 0, 0, 0, 0, 13, 150, 316, 258, 0, 0, 0, 0, 0, 288, 0, 0, 0, 0, 0, 0, 0, 92, 0, 0, 0, 0, 2, 0, 0, 0, 269, 0, 0, 0, 0, 0, 0, 35, 0, 0, 1, 0, 0, 0, 0, 172, 0, 0, 0, 0, 0, 0, 0, 1, 5, 13, 0 ), 14, 8, TRUE) OT <- matrix(c( 64, 0, 0, 0, 0, 0, 0, 0, 0, 15, 0, 0, 0, 0, 0, 0, 0, 2, 0, 0, 0, 0, 0, 0, 0, 0, 11, 0, 0, 0, 0, 0, 0, 3, 0, 0, 0, 0, 0, 0, 0, 6, 0, 0, 0, 0, 0, 0, 0, 0, 0, 13, 0, 0, 0, 0, 0, 0, 0, 0, 738, 0, 0, 0, 0, 0, 0, 0, 0, 288, 0, 0, 0, 0, 0, 0, 0, 92, 0, 0, 0, 0, 0, 0, 0, 0, 271, 0, 0, 0, 0, 0, 0, 36, 0, 0, 0, 0, 0, 0, 0, 172, 0, 0, 0, 0, 0, 0, 0, 0, 0, 14 ), 14, 8, TRUE) dimnames(IT) <- dimnames(OT) <- list( c( "product.CHN", "labor.CHN", "capital.CHN", "bond.CHN", "tax.CHN", "dividend.CHN", "imported.product.CHN", "product.ROW", "labor.ROW", "capital.ROW", "bond.ROW", "tax.ROW", "dividend.ROW", "imported.product.ROW" ), c( "production.CHN", "consumption.CHN", "investment.CHN", "foreign.trade.CHN", "production.ROW", "consumption.ROW", "investment.ROW", "foreign.trade.ROW" ) ) ge <- gemInputOutputTable_2_7_4(IT, OT, return.dstl = TRUE) ge$p ge$z node_plot(ge$dstl[[1]]) ge$dstl[[1]]$a #### technology progress in CHN OT.TP <- OT OT.TP["product.CHN", "production.CHN"] <- OT["product.CHN", "production.CHN"] * 1.2 ge.TP <- gemInputOutputTable_2_7_4(IT, OT.TP, return.dstl = TRUE) ge.TP$p ge.TP$z ge.TP$dstl[[1]]$a #### capital accumulation in CHN OT.CA <- OT OT.CA["capital.CHN", "consumption.CHN"] <- OT["capital.CHN", "consumption.CHN"] * 2 ge.CA <- gemInputOutputTable_2_7_4(IT, OT.CA) ge.CA$p ge.CA$z #### labor supply change in CHN OT.LSC <- OT OT.LSC["labor.CHN", "consumption.CHN"] <- OT["labor.CHN", "consumption.CHN"] * 0.5 ge.LSC <- gemInputOutputTable_2_7_4(IT, OT.LSC) ge.LSC$p ge.LSC$z #### tariff rate change in CHN IT.TRC <- IT IT.TRC["tax.CHN","foreign.trade.CHN"] <- IT.TRC["tax.CHN","foreign.trade.CHN"] * 1.2 ge.TRC <- gemInputOutputTable_2_7_4(IT.TRC, OT) ge.TRC$p ge.TRC$z ```

gemInputOutputTable_2_7_4 function