Closure

The Tools...Closure command helps you to find a standard closure for your GE model. It can also be used to find logical errors in your model, or to help construct a STI file. The results of the closure analysis are contained in a text report file suffixed CLO.

TABmate starts from the premise that there must be the same number of endogenous variables as equations in your model. By extension, we can usefully imagine that each equation explains a particular variable. Variables not explained by any equation are deemed to be exogenous in the standard closure.

In order for TABmate to know which variable is explained by a given equation, the modeller must follow a naming convention for equations. The convention is that the equation which explains variable p1, say, is named E_p1 (prefix E_). If you do not follow this convention, the Closure command will be no use to you, although the rest of TABmate will work normally.

Normally each equation must be of the same dimensions (range over the same sets) as the variable which it explains. TABmate checks that the dimensions match.

Sometimes several equations explain parts of a single variable; in this case name them E_p1A, E_p1B, E_p1C and so on. You will have to check in the CLO report file that the total size of the several equations adds up to to the size of the variable they explain.

The naming convention does not support the idea that one equation explains several different variables.

In principle, to name the equations one must have a particular standard closure in mind; in practice closure variations will affect only a few equations and variables.

Sometimes it is difficult to link a particular equation to a single variable. TABmate does not insist that you do so: you can give such an equation an arbitrary name. The effect is that the Closure report file becomes less easy to use. It's better to name such an equation after some endogenous variable of the same size which no other equation is named after -- even if the connection between equation and variable is indirect.

If the above naming convention is followed, TABmate is able to perform the donkey work of matching equations to variables, and checking that their dimensions match. Unexplained variables are presumed to be exogenous. The results of this analysis are contained in a report file.

Another advantage of the naming convention suggested above is that it that condensation (STI) files are simpler to make -- it is easy to remember the name of the equation used for substitution. Indeed TABmate is able to generate these condensation instructions automatically.

A better condensation can make large models run more quickly. The Closure Report can be used with the Condensation Information File to help you find such a condensation.

You have to run either TABLO Code or TABLO from STI without error, before you can use the Closure command. If you use the STI method, only variables and eqations in the condensed or final system will be mentioned (not omitted variables or substituted variables and equations).

Additions October 2004

•The Closure analysis now works better for levels variables. Eg, the equation E_X now matches levels variable X (linear variable p_X).

•The Closure analysis now ends with a list of strangely named variables: variables that are ordinary change although this is not suggested by their name; or are percent change although their name suggests otherwise. The aim is to help you notice a common error: forgetting to add the (change) qualifier to a variable.

Additions November 2009

•The Closure analysis now works better with complementarities. Eg, the complementarity with name fx3 now matches a variable named fx3. Variable $del_Comp and artificial variables with names ending in @E, @D, @L, or @U do not appear in the exogenous list.