Capital and labour markets - COFFEE-TEA: Difference between revisions

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The macroeconomic closure assumes full employment of the factors of production (capital and labour). Savings equals investment in the general equilibrium, but regionally the imbalances are closed by a surplus (or deficit) in the current account. An endogenous real exchange rate clears the current accounts and the capital account decreases exougenously in the long-run. Capital stock evolves at each period with the formation of new capital that depends on the investment level in that period and the capital depreciation rate, as described in Equation 2
The macroeconomic closure assumes full employment of the factors of production (capital and labour). Savings equals investment in the general equilibrium, but regionally the imbalances are closed by a surplus (or deficit) in the current account. An endogenous real exchange rate clears the current accounts and the capital account decreases exougenously in the long-run. Capital stock evolves at each period with the formation of new capital that depends on the investment level in that period and the capital depreciation rate, as described in <xr id="eqn:TEA_eq1"/>.


<equation id="eqn:TEA_eq1">
<math>K{_{r,t}} = I{_{r,t}} + (1 - \delta{_r}) K{_{r,t-1}}</math>
<math>K{_{r,t}} = I{_{r,t}} + (1 - \delta{_r}) K{_{r,t-1}}</math>
</equation>


where:
where:
 
<math>K{_{r,t}}</math> is the capital stock in region ''r'' and time ''t'';
<nowiki>$K{_{r,t}}$ is the capital stock in region $r$ and time $t$;</nowiki>
<math>I{_{r,t}}</math> is the investment in new capital goods in region ''r'' and time ''t'';
 
<math>\delta{_r}</math> is the depreciation rate of capital in region ''r''.{{ModelDocumentationTemplate
<nowiki>$I{_{r,t}}$ is the investment in new capital goods in region $r$ and time $t$; and</nowiki>
 
$\delta{_r}$ is the depreciation rate of capital in region $r$.{{ModelDocumentationTemplate
|IsEmpty=No
|IsEmpty=No
|IsDocumentationOf=TEA
|IsDocumentationOf=TEA
|DocumentationCategory=Capital and labour markets
|DocumentationCategory=Capital and labour markets
}}
}}

Revision as of 20:37, 18 December 2018

The macroeconomic closure assumes full employment of the factors of production (capital and labour). Savings equals investment in the general equilibrium, but regionally the imbalances are closed by a surplus (or deficit) in the current account. An endogenous real exchange rate clears the current accounts and the capital account decreases exougenously in the long-run. Capital stock evolves at each period with the formation of new capital that depends on the investment level in that period and the capital depreciation rate, as described in <xr id="eqn:TEA_eq1"/>.

<equation id="eqn:TEA_eq1"> </equation>

where: is the capital stock in region r and time t; is the investment in new capital goods in region r and time t;

is the depreciation rate of capital in region r.

Alert-warning.png Note: The documentation of COFFEE-TEA is 'under review' and is not yet 'published'!

Model Documentation - COFFEE-TEA

Corresponding documentation
Previous versions
Model information
Model link
    Institution COPPE/UFRJ (Cenergia), Brazil, http://www.cenergialab.coppe.ufrj.br/.
    Solution concept General equilibrium (closed economy)
    Solution method The COFFEE model is solved through Linear Programming (LP). The TEA model is formulated as a mixed complementary problem (MCP) and is solved through Mathematical Programming System for General Equilibrium -- MPSGE within GAMS using the PATH solver.
    Anticipation
    Retrieved from "https://www.iamcdocumentation.eu/index.php?title=Capital_and_labour_markets_-_COFFEE-TEA&oldid=9663"