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The VATTAGE Regional Model VERM - A Dynamic, Regional, Applied General Equilibrium Model of the Finn

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  • Honkatukia, Juha

Abstract

Applied general equilibrium models have become a standard tool for the analysis of structural policies in many countries and international research organisations. Their use has been prompted by both developments in economics, but also on the growing need for quantitative policy analysis. The analysis of actual policy options mandates the use of numerical methods, but there are several other reasons to suggest the use of AGE models in particular. Chief among these is the applicability of models that rely on explicit optimisation on the analysis of welfare impacts of structural policies. It may also be the case that many policy issues are intractable by theoretical models, for example, when the policies concern several sectors or regions of the economy, or involve contradicting effects. This report describes the VERM model used in VATT, the Government Institute for Economic Research. The model has been used to study the effects of various tax policies, regional policies, and environmental policies on the economy. Lately, the model has seen extensive use in the anticipation of regional development, especially in the labour markets. The report contains a full description of the model code and its underlying theory. With the help of examples, it also shows how simulation results can be interpreted.

Suggested Citation

  • Honkatukia, Juha, 2013. "The VATTAGE Regional Model VERM - A Dynamic, Regional, Applied General Equilibrium Model of the Finn," Research Reports 171, VATT Institute for Economic Research.
    • Handle: RePEc:fer:resrep:171
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    File URL: https://www.doria.fi/handle/10024/148709
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    References listed on IDEAS

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    1. Honkatukia, Juha, 2009. "VATTAGE - A dynamic, applied general equilibrium model of the Finnish economy," Research Reports 150, VATT Institute for Economic Research.
    2. Alho, Kari, 2002. "The Equilibrium Rate of Unemployment and Policies to Lower It: The Case of Finland," Discussion Papers 839, The Research Institute of the Finnish Economy.
    3. Mark Horridge, 2011. "The TERM model and its data base," Centre of Policy Studies/IMPACT Centre Working Papers g-219, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Shoven, John B. & Whalley, John, 1974. "On the computation of competitive equilibrium on International markets with tariffs," Journal of International Economics, Elsevier, vol. 4(4), pages 341-354, November.
    5. Shoven, John B. & Whalley, John, 1972. "A general equilibrium calculation of the effects of differential taxation of income from capital in the U.S," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 281-321, November.
    6. Jalava Jukka & Pohjola Matti & Ripatti Antti & Vilmunen Jouko, 2006. "Biased Technical Change and Capital-Labour Substitution in Finland, 1902-2003," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-20, April.
    7. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, October.
    8. John B. Shoven & John Whalley, 1973. "General Equilibrium with Taxes: A Computational Procedure and an Existence Proof," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(4), pages 475-489.
    9. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-1051, September.
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    Cited by:

    1. Francois J. Stofberg & Jan H. van Heerden & Heinrich R. Bohlmann, 2020. "A Fiscus for Better Economic and Social Development in South Africa," Working Papers 202072, University of Pretoria, Department of Economics.
    2. Roope Husgafvel & Kari Poikela & Juha Honkatukia & Olli Dahl, 2017. "Development and Piloting of Sustainability Assessment Metrics for Arctic Process Industry in Finland—The Biorefinery Investment and Slag Processing Service Cases," Sustainability, MDPI, vol. 9(10), pages 1-16, September.
    3. Breugel, Gerla van, 2017. "Identification and anticipation of skill requirements: Instruments used by international institutions and developed countries," Documentos de Proyectos 42233, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Honkatukia, Juha, 2019. "Evaluating the welfare effects of public health care provision - an integrated, regional AGE model for Finland," Conference papers 333101, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Stofberg, F.J. & van Heerden, J.H. & Horridge, M. & Roos, L., 2022. "A fiscus for better economic and social development in South Africa," Conference papers 333392, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Frey, Miriam, 2014. "Assessing the Impact of a Carbon Tax in Ukraine," Conference papers 332556, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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