Dynamic Equilibrium Model for Economic Development, Resources and Agriculture

The model

Developed by the Joint Research Centre of the European Commission, the Dynamic Equilibrium Model for Economic development Resources and Agriculture (DEMETRA) is a single-country computable general equilibrium (CGE) model, developed in GAMS.

The DEMETRA model is based on STAGE_DEV (Aragie, E. A., McDonald, S., & Thierfelder, K. (2016). A static applied general equilibrium model: Technical documentation: STAGE_DEV Version 2). STAGE DEV has been developed for the European Commission by Aragie, E., McDonald, S., and Thierfleder, K.

The JRC employs DEMETRA within the framework of the Pan African Network on the economic Analysis of Policies (PANAP).

DEMETRA investigates the economy-wide and distributional impacts of specific policies and/or structural shocks, sectoral transmission of sector-specific policies for sectors, agents and regions. DEMETRA is employed to produce ex-ante impact analyses mainly of food security related topics.

The key model features are:

- Flexible CES nesting of production functions - the user can modify the definition and nesting of production technologies for each productive activity, without changing the model code, eliminating thus the risk of errors and mis-specifications of CES production functions
- Flexible CES-LES nesting of household demand systems - in the same spirit as for production functions, the user can define and group consumption goods
- Home production for home consumption whereby non-market (subsistence) production is consumed by the producing household
- Migration across regions and between rural and urban areas based on socioeconomic drivers (income, health and education levels)
- Factor market segmentation with a consideration of wage differentials across sectors
- An advanced recursive dynamic algorithm with an allocation of investment based on sectoral capital returns and with changes in labour supply tracing population count
- International trade modelled through a two-level Armington specification allowing for the consideration of multiple trade partners

DEMETRA is distributed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0) licence.