R/gemTwoCountry_RealExchangeRateIndex_7_4.R

In GE: General Equilibrium Modeling

#' @export
#' @title Calculating Real Exchange Rate Index
#' @aliases gemTwoCountry_RealExchangeRateIndex_7_4
#' @description Some examples of calculating the real exchange rate index in a two-country economy.
#' @param ... arguments to be passed to the function sdm2.
#' @return  A real exchange rate index.
#' @seealso \cite{\link{gemTwoCountry_Bond_7_4}}
#' @examples
#' \donttest{
#' # es.DFProd is the substitution elasticity between domestic and foreign products.
#' makeDstl <- function(es.DFProd = 0.5,
#'                      alpha.firm.CHN = 1,
#'                      beta.household.CHN = c(0.75, 0.25),
#'                      outbound.investment.rate = 0.25) {
#'   es.CL <- 0.8 # substitution elasticity between capital and labor
#'
#'   dst.firm.CHN <- node_new("output",
#'     type = "SCES", alpha = alpha.firm.CHN, beta = c(0.75, 0.25), es = es.CL,
#'     "lab.CHN", "cap.CHN"
#'   )
#'
#'   dst.household.CHN <- node_new("util",
#'     type = "FIN", rate = c(1, outbound.investment.rate),
#'     "cc1", "bond.ROW"
#'   ) # 0.1 is the amount of foreign investment corresponding to
#'   # each unit of cc1 (i.e. composite commodity 1).
#'
#'   node_set(dst.household.CHN, "cc1",
#'     type = "SCES", alpha = 1, beta = beta.household.CHN, es = es.DFProd,
#'     "prod.CHN", "prod.ROW"
#'   )
#'
#'   node_plot(dst.household.CHN)
#'
#'   dst.firm.ROW <- node_new("output",
#'     type = "SCES", alpha = 1, beta = c(0.5, 0.5), es = es.CL,
#'     "lab.ROW", "cap.ROW"
#'   )
#'
#'   dst.household.ROW <- node_new("util",
#'     type = "SCES", alpha = 1, beta = c(0.05, 0.95), es = es.DFProd,
#'     "prod.CHN", "prod.ROW"
#'   )
#'
#'   list(dst.firm.CHN, dst.household.CHN, dst.firm.ROW, dst.household.ROW)
#' }
#'
#' dstl <- makeDstl()
#'
#' SExg <- {
#'   tmp <- matrix(NA, 7, 4, TRUE)
#'   tmp[2, 2] <- 30 # the supply of lab.CHN
#'   tmp[3, 2] <- 10 # the supply of cap.CHN
#'   tmp[5, 4] <- 156 # the supply of lab.ROW
#'   tmp[6, 4] <- 156 # the supply of cap.ROW
#'   tmp[7, 4] <- 8 # the supply of bond.ROW
#'   tmp
#' }
#'
#' f <- function(A = dstl,
#'               S0Exg = SExg) {
#'   sdm2(
#'     A = A,
#'     names.commodity = c(
#'       "prod.CHN", "lab.CHN", "cap.CHN",
#'       "prod.ROW", "lab.ROW", "cap.ROW", "bond.ROW"
#'     ),
#'     names.agent = c(
#'       "firm.CHN", "household.CHN",
#'       "firm.ROW", "household.ROW"
#'     ),
#'     B = {
#'       tmp <- matrix(0, 7, 4, TRUE)
#'       tmp[1, 1] <- tmp[4, 3] <- 1
#'       tmp
#'     },
#'     S0Exg = S0Exg,
#'     numeraire = "lab.CHN"
#'   )
#' }
#'
#' ge.benchmark <- f()
#'
#' ## real exchange rate index
#' reri <- function(ge.new, ge.benchmark) {
#'   weight.CHN <- rowSums(ge.benchmark$SV)[c("prod.CHN", "lab.CHN", "cap.CHN")]
#'   weight.ROW <- rowSums(ge.benchmark$SV)[c("prod.ROW", "lab.ROW", "cap.ROW")]
#'
#'   weighted.mean(ge.new$p[c("prod.ROW", "lab.ROW", "cap.ROW")], weight.ROW) /
#'     weighted.mean(ge.new$p[c("prod.CHN", "lab.CHN", "cap.CHN")], weight.CHN)
#' }
#'
#'
#' ## technology progress in CHN
#' reri(f(A = makeDstl(es.DFProd = 5, alpha.firm.CHN = 2)), ge.benchmark)
#' reri(f(A = makeDstl(es.DFProd = 0.5, alpha.firm.CHN = 2)), ge.benchmark)
#'
#' ## labor supply change in CHN
#' SExg.LSC <- SExg
#' SExg.LSC[2, 2] <- SExg.LSC[2, 2] * 2
#'
#' reri(f(A = makeDstl(es.DFProd = 5), S0Exg = SExg.LSC), ge.benchmark)
#'
#' reri(f(S0Exg = SExg.LSC), ge.benchmark)
#'
#' ## capital accumulation in CHN
#' SExg.CA <- SExg
#' SExg.CA[3, 2] <- SExg.CA[3, 2] * 3
#'
#' reri(f(A = makeDstl(es.DFProd = 5), S0Exg = SExg.CA), ge.benchmark)
#'
#' reri(f(S0Exg = SExg.CA), ge.benchmark)
#'
#' ## preference change in China
#' reri(f(A = makeDstl(es.DFProd = 5, beta.household.CHN = c(0.5, 0.5))), ge.benchmark)
#' reri(f(A = makeDstl(beta.household.CHN = c(0.5, 0.5))), ge.benchmark)
#'
#' ## outbound-investment-rate change in China
#' reri(f(A = makeDstl(es.DFProd = 5, outbound.investment.rate = 0.1)), ge.benchmark)
#' reri(f(A = makeDstl(outbound.investment.rate = 0.1)), ge.benchmark)
#' }

gemTwoCountry_RealExchangeRateIndex_7_4 <- function(...) sdm2(...)