ABSTRACT

This chapter is devoted to the ancillary equations and identities in the ESU01 model. The ancillary equations are so labelled because they provide essential support to the ESU01 model, though the variables involved sometimes are of interest in themselves. For example, the first group of stochastic equations that we describe concern the determination of key prices in the economy – consumer, producer, import and export. In other macroeconometric models, these could have been part of a “price block”. A second group of tax and CPF equations elucidate the fiscal revenues of the government and contributions to and withdrawals from the provident fund. We also list and discuss the identities in the ESU01 model without which it cannot be solved and simulated. These include the usual national income accounting definitions, trade identities, and an identity for inventories that serves to close the model.