# Macro-economy - GCAM

Note: The documentation of GCAM is 'in preparation' and is not yet 'published'!
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Model information
Institution Pacific Northwest National Laboratory, Joint Global Change Research Institute (PNNL, JGCRI), USA, http://www.globalchange.umd.edu.
Solution concept General equilibrium (closed economy)GCAM solves all energy, water, and land markets simultaneously
Solution method Recursive dynamic solution method
Anticipation GCAM is a dynamic recursive model, meaning that decision-makers do not know the future when making a decision today. After it solves each period, the model then uses the resulting state of the world, including the consequences of decisions made in that period - such as resource depletion, capital stock retirements and installations, and changes to the landscape - and then moves to the next time step and performs the same exercise. For long-lived investments, decision-makers may account for future profit streams, but those estimates would be based on current prices. For some parts of the model, economic agents use prior experience to form expectations based on multi-period experiences.

## Modeling Approach

Regional GDP is calculated using a simple one-equation model:

${\displaystyle {\text{Equation 1}}:GDP_{r,t+1}=POP_{r,t+1}(1+GRO_{r,t})^{tStep}({\frac {GDP_{r,t}}{POP_{r,t}}})P_{r,t+1}^{\alpha }}$

where

 r region t period tStep number of years in time step GDPr,t GDP in region r in period t POPr,t population in region r in period t GROr,t annual average per capita GDP growth rate in region r in period t

See Macro-Economic System for more details.