Technical Workshop: Impact Assessment with Stochastic Dynamic Computable General Equilibrium Models

As a complementary activity to ECLAC’s visit to Ecuadorian authorities and businessmen, from November 21 to 25, 2022, ECLAC technicians held the Workshop “Impact Assessment with Stochastic Dynamic Computable General Equilibrium Models” between November 28 and on December 1, 2022. The main objective of the activity was to strengthen the technical capacities of the team of officials of the Vice Ministry of Foreign Trade of the MPCEIP.

During the workshop, several modules related to the analysis of economic growth models were taught, mainly real cycle models, as well as applications in Matlab, stochastic growth models, the input-output model, regional input-output matrices, multi-country matrices, techniques for estimating sectoral tariffs based on information on tariff protection and trade structure (exports and imports).

A dynamic stochastic computable general equilibrium model applied to the case of Ecuador was presented, as well as stochastic and deterministic simulation techniques. All this complemented with practical applications in Dynare.

The officials participating in the workshop carried out exercises applied to the case of a possible trade agreement between Ecuador and the Republic of Korea. For this, a pilot model of practical application was developed for 3 regions (Ecuador, Republic of Korea and Rest of the World) and 13 economic sectors.

Based on the analysis of alternative scenarios, simulations of tariff reduction shocks of total or partial tariff reduction were developed, considering sensitive products. The workshop concluded with the analysis of the results obtained in the particular exercises, with emphasis on the economic intuition to follow, as well as the necessary considerations when interpreting the results.