Spatial dimension - GEM-E3

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Model Documentation - GEM-E3

Corresponding documentation
Model information
Model link
Institution Institute of Communication And Computer Systems (ICCS), Greece, .
Solution concept General equilibrium (closed economy)
Solution method Optimization

The GEM-E3 model is a multi-regional model representing 38 countries/regions and 31 sectors of production. EU countries are represented individually in the GEM-E3 (Table 1). The countries/regions are linked through endogenous bilateral trade flows. Total demand is allocated between domestic products and imported products, following the Armington specification. In this specification, branches and sectors use a composite commodity which combines domestically produced and imported goods, which are considered as imperfect substitutes (Armington assumption). Each country buys and imports at the prices set by the supplying countries following their export supply behaviour. The buyer of the composite good (domestic) seeks to minimise his total cost and decides the mix of imported and domestic products so that the marginal rate of substitution equals the ratio of domestic to imported product prices. The GEM-E3 model requires detailed bilateral trade matrices for all regions and commodities included in the model. GTAP database provides such matrices together with bilateral duties and transportation costs. For countries that are not identified separately in GTAP the UN Comtrade database is used in order to extract the relevant data.

Table 1: Countries/regions represented in the GEM-E3 model

Austria Finland Malta Canada
Belgium France Netherlands Brazil
Bulgaria United Kingdom Poland China
Croatia Greece Portugal India
Cyprus Hungary Slovakia Oceania
Czech Republic Ireland Slovenia Russian Federation
Germany Italy Sweden Rest of Annex I
Denmark Lithuania Romania Rest of the World
Spain Luxembourg USA
Estonia Latvia Japan