The model used to fulfill the objectives of this paper is designed for a small open economy with 17 productive sectors.
4 It is a static model because the simulation is carried out for a specific year,
although firms and households can react to external stimuli,
such as increased prices, through substitution capabilities.
Production in each sector is a combination of materials and the remaining productive factors (capital, labor, energy).
The model also assumes that domestic markets of goods, services and factors are perfectly competitive,
with no involuntary unemployment. Capital and labor supplies are perfectly mobile among sectors but are immobile
internationally, although the capital supply is inelastic.
The model simulates an economy that exchanges goods and services with other economies and makes net transfers.
Total supply of a good in the economy is a composite good of national production and imports,
which are considered imperfect substitutes, and whose final destination is either the export or domestic markets.
Furthermore, non-resident households in Spain (mainly tourists) also consume goods and services.
The macroeconomic equilibrium is determined by the net lending or borrowing position
of the total economy with the rest of the world (an exogenous variable in the model),
which is equal to the difference between national savings (defined endogenously by each of the institutions) and
investments