We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Published online by Cambridge University Press: 05 June 2012
It has been found that in some cases the investment mechanisms in the GDyn model can result in gross investment falling below zero. This will occur when the investment mechanisms cause the actual rate of return to rise considerably, lowering investment to unacceptable levels; for example, if there is a large error in expectations (the expected rate of return far exceeds the actual rate) or the expected and actual rates of return are far below the target rate of return.
In this appendix a complementarity is introduced to ensure that in these cases investment does not fall below a minimum level. We use the method developed by Harrison, Horridge, Pearson and Wittwer (2002) for introducing complementarities. The method is designed specifically for models implemented using the GEMPACK software.
First the equations from the GDyn model are used to demonstrate the negative investment problem in the GDyn model. Following this we introduce the complementarity and show, using the example, how the complementarity works.
Negative Investment
Here we outline an example of the case where investment falls to an unacceptable level. The example is based on a small 7 commodities by 7 region aggregation of the GDyn Data Base.
To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.
