CoPS/IMPACT Working Paper Number IP-61

Title: Solving Applied General Equilibrium Models Represented as a Mixture of Linearized and Levels Equation

Author: W. Jill Harrison, K.R. Pearson, Alan A. Powell, E. John Small

Abstract

General equilibrium models are usually represented as a system of levels equations (e.g. in North America) or a system of linearized equations (e.g. in Australia). Either representation can be used to obtain accurate solutions. General-purpose software is available in both cases - GAMS or MPS/GE for levels modellers and GEMPACK for linearizers. Some equations (notably accounting identities) are naturally expressed in the levels while others (especially behavioural equations) are naturally expressed in a linearized form. This paper describes the new GEMPACK facility for solving models represented as a mixture of levels and linearized equations and discusses the advantages to modellers of using such a representation.

JEL classification: C68, C88

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