A new forecasting and simulation model for the polish economy — “SAPO”

A NE@ FORECASTING AND SIMlLATION MCDEL FOR THE WLISH Jerzy

ECONOMY-

“SAW” 1)

Pawilno-Paceruict

The model, named “SAW” for the abbreviation of the Polish dsecription of related reseerch project, is a large-scale, computer simulation modal of economic change in Poland. It is designed for economic policy analysis on the national level and for shortand medium-term forecasts of asssntial macroeconomic indicators. The model is also intended to help the planning authcrrties to control the feasibility of central plans and to aesas the degree of their fulfillment.

1.

General

description

The mod81 is economy

for

although up to

intended

the

purpose

technically

ten years.

capacity,

(1)

sectors

2.

food

Juezczak model.

the

the SAP0 Model

Polish

economy

[2].

algorithm

developed

is

to a modified

year

usually

expected

(called

f orscaet, years

transformed

This not

are

yet

mostly

is

the

to

three

future. periods

of

productive invest-

the

exportsd

groups

the

for

size of and impor-

countries.

The consu-

of

products:

products,

form,

more useful

which

initial

directly

because

[l]

(3)

from

the

general as

services.

the

preceeds

atatletice

for

the moment when projections

earlier

framework

being

parts

process are the

the the

set

of

to

the

central

in-

of

computa-

calculated

first

the

of of

the

familiar

variables

of

[3] , and

First,

form, in

that

MaCi0jeVJSki

,

the model.

original of

different

be regarded

to solve its

values

necessary

known at

1 decribes

can also

from

“basic”)

is

by Barcrak

Figure

put

the

aggregated

non-food

of

supplies,

commodities of

(2)

aim of

computer

Second,

of

is

in

issues

consumer

and non-socialist

beverages,

I-VII

tions.

years

projactione

interrelated

exports,

groups

socialist

five

structure

the modal

and Jelfe

planners,

the

to

extend

The economy

The submodels

data

one

demands and supplies

of

for

the underlying to

treats

and 11 basic both

covers

The general models

possible

production,

and alcoholic

Structure

projecting

is

equilibrium,

to and from

mer market

of

The model

ment and market ted

it

employment,

13 major

to represent

year

basic

for

the

year

for of

the

are

following

needed.

“The model was developed at the central school of Planning and Statistics in Warsaw. The members of the research team were: M.Garbicr, f, Kuozewuski , K.MBfUr, w.Misigg end J. PawiIno+acswlcz (the loader of the team).

start I Trenaforaation

I.

of

tha

input

data

I Valuaa

II.

of

initial

variablaa

I

4 III.

Productive

capscity

1

I IV.

Labor damand, employment and corractione of productive capacity

V.

consumption, foreign Production, market equilibrium trade balance,

I I Investment

VII.

outlays

Transformation

1

of

the

output

data

I End

Figure

1.

General

there

Next, economic

are

“heart”

four of

in

order

necessary

to

amount

(which

tends

brings

the

to

of

labor.

necessary

blem

exchangeable

tion

or

the

level

of

constraints

productive

contains

the

most

the

CPE’s)

not the

estimates

The

(such

may

is

as

reflect

micro-level

capacity

utilization

standard

input-output

craeta

the

it

Is

be

operated

assumed by a

sufficient IV

productive

programming

objective

pro-

functions

maximization

of

may

conaump-

an

expected

behavior

(a

function

maximizing

is

an

real

productive

sub-model

for

a mathematical

functions.

they

on

must

labor

earlier of

targets

or

HOWeVer, capital

in

form

They determinea

capital.

available

of a

objective

product)

III

practice

V has

organisations

III-VI,

sub-mods1

installed

the

macroeconomic

national

economic

minimal of

broad

If

Model

numbered

fixed

the

corrections

submodal

SAPC

The

gross

a common

The

represent

of utilized

be

the

modal.

be

capacity. with

of

sub-models

the

as a function

capacity that

structure

example).

model

with

of

The

tha sat

a section

a group of constrslnts reflecting the exiaand Imports increaaaa. and acceptable levels of the foreign trade balance and of the inflationary gap on the conaumar market. The sub-modal IV is a sat of equations for aeotoral distributior of dispoaebla investment supplies. Shares of salected eectors in the total value of disposable investment may be traatad as instrumental varia-’ for

imports

ting

limits

determination,

for

exports

bles. The earlier the

sub-models models

output

of

III-IV entering

one-yesr

are the

aolvad input

simulafion

recursively

for

the

run

affecting

with

following tha

the

output

of

submodela, and with initial oonditiona

for

following yeers

the

model

reeembles

eubmodel period

VII and

eppropriate

3.

its

in

earlier

generetee transforme planning

the them

the

eimuletion

period.

verelon

developed

numerical

results

into

a

set

of

tables

in for

In

this

1979

[4],

the

whole

regard

the

Finally,

the

forecasting

whicha=designed

suit

to

documents.

Eque tione

The

f ollowfng

set

of

relationships

describes

the

main

features

of

the

model:

Lits

(1)

if&S

(2)

(3)

x5 d =j

(4)

mi -

(5)

F3i(x1,...,xn)

fi

*

F410+...

,x,,)

fi

3 eifi

(7)

ei

= F,51(fl)

(81

ei

4 ;?i

(9)

“i

d

(6)

(30)

mi

01)

d

i 6s

- Fsk.(fi)

=i l

d +

F7+...+,)

rt” -

gs

P2ci

=r (15) (16) (17)

152

where: k

-

gross

9

-

investment

fixed

outlays

f

-

productive

capscity

1

-

employman

h

-

number

lS

-

labor

supply

x

-

input

(production)

m

-

imports output

f

-

S

-

lower

a

-

exports

iT

-

iii b

capital by

sector

of

destiny

t

of

working

hours

par

weak

bounds

for

output

upper

bounds

for

exports

-

upper

bounds

for

imports

-

lowest

sccaptabla

Pa

-

foreign

prices

of

one

unit

of

exported

goods

Pm

-

foreign

prices

of

one

unit

of

imported

goods

consumer

P

-

currant

C

-

consumption

d

-

currant

foreign

money

demand

for

-

inflationary

“overhang”

-

upper

for

V

-

investment

U

-

inventory

t

-

time

j

-

number

of

i

-

number

of

s =

11 I...

For count

bounds

of

the

the

also

and

number the is

a set

of

of

prices

the

moment).

currant

of

prices.

of

587.

of

Moat

F2j

to

In

all

variables

the

latest

However, This

no

some the

the

available

case

data

expressed

veriablas for

of

(1)

economic

existing

in

table

the

196 appa-

import model.

parameters

especially

equations

specific

of

are

input-output

This

input-output

is

the

is

parameters

338)

estimation.

some

batwa-

varlablaa

A group

in

ac-

relationships

constant

in

are

a comprehensive

statistics.

functions

the

of

coefficients

with

remove

variables.

(decision)

number

(exactly

econometric

not

principal

them

currant

psramatars

is

the

instrumental The

and

between

equations

show

forecast.

incompatibilities

Basically,

of

does

technical

Flj

necessary

the

set

it

from

the

,111

this

the

means of

are

other

of

available

parameters

Cl,...

but

modal

coefficients

is

“overhang”

origin

function-relationships

space,

The

by

=

modal,

year

in

They

of

product

lack

obtained

inflationary

sector

, S’

symbolize

are

services

sector

,Fgj

every

They

the

and

increase

,131

of

aring

by

goods

variable

en variables. for

balance

prices

r

a...

trsda

suppllas

?

Flj

changes

price

is

concerns and

(2).

There

intarpretation. differences

and

series. constant (i.e.

are

additionally

the

foreign

the

prices. 1982

They prices

calculated trade

and

the

are at

in consumer

153

market In

segments order

costly

of

a psckage

developed

the model.

to make_the for

of

the

computer

to manage the data variety sive

4.

1100.

the model easier

quickly, model

programs

parameters,

easily

and less

was designed

The programs

to rsestimate

runs

of detailed

enable

and

the user

and to obtain

and with

no need

for

a extsn-

structure.

Applicetions The SAPS Model

June 1983.

Since

8s changes

in

first

was developed then

the

conditional

verelon,

the

growth

covering

the

ment for

1984

stency

analysis

of

to extend

the

long-tera

structural

rience

is

the

not

the

period,

blueprint

for of

enough

the

from the

the

central

end of

ecoromy.

preliminary

results

1983. fulfill-

by the

consi-

An attempt

peper

A two-year

eny far-reaching

the

plan

plsn.

e seperate

1983

updated

of

wes followed

1985

Polish

to justify

However,

obtained

study

at

Its

in

to diagno-

In 3uly

forecast

was made in the

studies

economy.

appeared

the

was completed

was prepared.

a detailed

This

horizon

It

several

polish

1983-1985

plan.

problems

usefulness.

recomendetions

fur

for

1980-1983. presented

presented

central

forecasting

certainly

on the model

rate

1984-1985

the authors

the

in

authors

forecast

In June 1984

licy

of

computer

Univac

basis.

of simulation konwledgs

implementation

user-oriented

on the expe-

conclusions and the

po-

model seem to be encouraging.

Rsf erences (1)

Barczsk A, B.Clepielewske, T.Jakubcryk, 2. Pawlowski. : Model aetryczny goepodarkl Polski Ludowej. Warszawa 1968.

[2)

Forecast for Development of Buszozak w. , welfe w. : A Conditional the Polish Eoonom in the Period 1983-1985. Prace Instytutu Ekonoletril I Stetyety If I Uniwereytstu t&drkiego, tddt 1983.

[3)

Msoiojewski VI., M.Oprre, derkl Polekl. 6ospodarke

[4)

to DLagnose Changes in the Growth Pawilno-Paoowicz 3. : Sirulations Rat0 of the Polleh Economy. State University of New York at stony Brook, Depertnaat of Eoonomice, Working Paper No. 218, October 1979

154

J.ZaJohowaki: Ekonoaetrycmy Planowa 6(19731.

skono-

model gospo-