|INS‐<br>12|<br><br>,<br>,<br>,<br>1<br>_c t_<br>_c t_<br>_c t_<br>_t_<br>_QG_<br>_qgb_<br>_qg01_<br>_QGSCAL_<br><br><br>|_c_<br>_C_<br>_t_<br>_T_<br><br>|Government<br>consumption|
|---|---|---|---|
||<br><br><br><br><br><br>, ,<br>,<br>,<br>, ,<br>, ,<br>,<br>,<br>, ,<br>,<br>,<br>,<br>,<br>,<br>1<br>1<br>1<br>_t_<br>_c a t_<br>_c t_<br>_c t_<br>_c a t_<br>_c C a A_<br>_c h t_<br>_c t_<br>_c t_<br>_c h t_<br>_c C h H_<br>_c gov t_<br>_c t_<br>_c t_<br>_c t_<br>_c C_<br>_SUBCT_<br>_sub_<br>_PQS_<br>_tq_<br>_QINT_<br>_sub_<br>_PQS_<br>_tq_<br>_QH_<br>_sub_<br>_PQS_<br>_tq_<br>_QG_<br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br>|||
|INS‐<br>13|<br><br>, ,<br>,<br>,<br>,<br>,<br>,<br>,<br>,<br>1<br>_c f t_<br>_c t_<br>_c t_<br>_c f_<br>_i f t_<br>_c C f_<br>_FCAP_<br>_i INS_<br>_c dstk t_<br>_sub_<br>_PQS_<br>_tq_<br>_capcomp_<br>_DKINS_<br>_sub_<br>_P_<br><br><br><br><br><br><br><br><br><br><br><br><br><br><br>,<br>,<br>, ,<br>1<br>_c t_<br>_c t_<br>_c i t_<br>_c C i INS_<br>_QS_<br>_tq_<br>_qdstk_<br><br><br><br><br><br>|_t_<br>_T_<br>|Commodity<br>subsidy|
||<br><br>,<br>,<br>,<br>,<br>, ',<br>', ,<br>'<br>1<br>_c tacm t_<br>_c t_<br>_c t_<br>_c c r_<br>_c r t_<br>_c C c_<br>_CDIS_<br>_sub_<br>_PQS_<br>_tq_<br>_icm_<br>_QMR_<br><br><br><br><br><br><br><br><br>|||
||<br><br>,<br>,<br>,<br>,<br>, ',<br>', ,<br>'<br>1<br>_c tace t_<br>_c t_<br>_c t_<br>_c c r_<br>_c r t_<br>_c C c_<br>_CDIS_<br>_sub_<br>_PQS_<br>_tq_<br>_ice_<br>_QER_<br><br><br><br><br><br><br><br><br>|||
||<br><br>,<br>,<br>,<br>,<br>, '<br>', ,<br>'<br>1<br>_c tacd t_<br>_c t_<br>_c t_<br>_c c_<br>_c r t_<br>_c_<br>_C_<br>_sub_<br>_PQS_<br>_tq_<br>_icd_<br>_QD_<br><br><br><br><br><br><br><br>_c C_<br><sup></sup>|||

# **A.2.4. Investment, system constraints, and numéraire**

This block covers investment spending by different institutions, how it is financed, and how the new capital that is generated feeds into the economy. The specification of investment and its financing makes it possible to specify the remaining system constraints, the markets for private capital factors, commodity balances, and the balance of payments.<sup>14</sup> (In Sections A.2.1 and A.2.3, we covered the markets for other factors and the government balance, respectively.) In addition, we here specify the numéraire, needed for CGE models like GEM‐ Core.

For the government, investment spending (or gross capital formation), _INVG_ , is defined as the sum of government savings (the difference between current receipts and spending), domestic net financing (indexed to the numéraire), and foreign net financing (exogenous in FCU) (INV1). The sum of the two financing terms is the government primary deficit. These two terms are referred to as net financing items since they represent the difference between new borrowing and interest payments; the latter do not appear explicitly in the

> 14 The term system constraints refers to constraints that are not perceived by individual actors (like household budget constraints) but which the economic system nevertheless most respect (like a labor market constraint which says that the quantity employed equals the labor force net of unemployment).

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