The IMAGE CGE Model: Understanding the Model Structure, Code and Solution Methods

This working paper details the structure, code and solution methods for IMAGE, which is an acronym of "Irish Model of Agriculture, General Equilibrium". The IMAGE model is based on the widely known ORANI model (Dixon et al. 1982) of the Australian economy. The model has a theoretical structure that is typical of many CGE (Computable General Equilibrium) models. It is a static model, as it does not have any mechanism for the accumulation of capital. It is based entirely on the assumption of perfect competition, with no individual buyer or seller being able to influence price. Demand and supply equations are derived from the solution of optimisation problems (e.g. profit or utility maximization) for private sector agents. The model allows for multiple household types, export destinations, land types and labour occupations.