OMEGA - Model Documentation

Overview & Synopsis

This document provides a complete and self-contained derivation of OMEGA, the Open-economy Multi-sector Endogenous-Growth Assessment model. Each equation is derived from first principles; intermediate algebraic steps appear in gray font and only the final equations are numbered for reference. To keep the exposition compact, sectors are written in a symmetric functional form, and the heterogeneity used in the calibrated model is recovered by imposing zero restrictions on selected parameters. The model features high- and low-skilled households with endogenous human capital accumulation; four final-good sectors and eight value-added sectors (four material, four energy-related); emission-trading bundlers that homogenize voluntary and compliance-market output; banking, employment, firm-value-expropriation, and input-specific importer firms; foreign capital firms; a Rest-of-the-World block; and a government conducting fiscal, monetary, low-skilled wage, and emission-cap policy. The documentation states all first-order conditions, market-clearing identities, quantity and price indices, structural shock processes, and indicator variables. A concluding section lists the zero parameter restrictions that collapse the symmetric model to the form implemented in code, and a final appendix reproduces the Dynare .mod source listing the model in its executed form.