The Structure of Applied General Equilibrium Models (original) (raw)

Applied General Equilibrium Analysis

Economica, 1986

Walrasian general-equilibrium theory provided the central framework of 20 th century economics, "the ultimate model of the market" (John Shoven and John Whalley 2015, 2). Joseph Schumpeter considered it the "Magna Carta" of economics, providing both a constitutional document and a map for the field (1954, 242 and 827). In the 1950s and 1960s, Harry Johnson (1951-52, 1956), Arnold Harberger (1962), and others used general-equilibrium methods to study a variety of applied policy issues, such as the welfare effects of tariffs and the incidence of the corporate income tax. The models used by these researchers were small enough that they could be solved analytically. By the 1970s, economists were developing general-equilibrium models of sufficient size and complexity that it was necessary to use computers to find numerical solutions. In this paper, we will discuss both analytical and computational models, but our main focus is on the computational models. The computational models have come to be known as applied general-equilibrium (AGE) or computational GE or computable GE (CGE) models. We will refer to the computational models as AGE models, even though the analytical models also fall under the rubric of applied work. AGE models involve mathematical specifications of the behaviors of agents, who interact through supply and demand for different goods in a Walrasian general-equilibrium system. Government policies are typically modeled as constraints to be manipulated. The models produce computer simulations of the effects of policy changes on economic variables, such as prices, quantities, growth rates, employment, income, and economic efficiency. AGE models are most widely employed in international trade, public finance, economic development, and

General Equilibrium Models: An Overview

This article reviews the literature on general equilibrium models, relevant to the Chilean economy, and revised versions of the papers presented at the Conference of General Equilibrium Models for the Chilean Economy organized by the Central Bank of Chile, that will be published in a book by the same name (edited by Rómulo Chumacero and Klaus Schmidt-Hebbel, 2005). This introductory chapter provides a brief overview of the development and application of three families of GEMs: macroeconomic GEMs, computable general equilibrium models, and overlapping generations models. We also summarize the scope and main results of the twelve GEMs that comprise the volume.

General equilibrium modelling: The state of the art

MPRA Paper No 105313, 2020

The general equilibrium approach's theoretical superiority has always been accepted in economic literature, as a robust, complete, and detailed general temporal equilibrium model that shows how money, production, saving level, capital goods and services prices, and the interest rate are jointly determined. This article is a time-path exploration of the literature on propositions related to general equilibrium modelling, and a highlight of its contemporary relevance. Over time and till now, the Walras’ proposition at best takes primacy, amidst others, and improvements in the development of sophisticated sub-models of asset markets within the general equilibrium framework had meant substantial progress since this permit analysis under more realistic conditions. However, limitations are clear, and steady advances in the model can better improve its application.

CEEAplA WP No . 06 / 2006 Computable General Equilibrium Models : A Literature Review

2006

Applied general equilibrium models have become popular tools used on ongoing economic policy debates. In this paper we discuss at length the most proeminent features of applied general equilibrium models in a comprehensive and non-technical way, thus accessible to the reader interested in economic policy but with no prior formal exposure to economic modeling. We rationalize the increasing political demand for such models as policy analysis tools. We argue that applied general equilibrium models are best equipped to model regional economies. Keywords: Regional Economic Modeling; CGE Models. JEL Codes: R11; C68. This paper was written within the development of a project to develop “An Instrument of Economic Policy Analysis for the Azores”, nanced by several institutions, namely, the US Department of Agriculture, the Luso-American Development Foundation and the Regional Government of the Azores. The project was managed by CEEAplA, an FCT supported center of the Universities of the Azo...

General Equilibrium Modeling for Economic Policy Analysis

International Journal of Economics and Financial Issues

This paper explores the value concept that is important in determining the relationship between demand and supply, and resource allocation in the economy. From value creation perspective, the value concept is redefined to explain value creation and value distribution in the economy. Based on this value concept, the value added method is used for gross domestic product (GDP) measurement that is also used as the objective function in the general equilibrium model. The starting point in general equilibrium modeling is the understanding on the structure and the flows of the economy, in which the general equilibrium mechanism relies on market equilibriums and macro balances. The simulation experiment is used to conduct economic policies from the changes in target sector structure and the combinations of macro closures in the hypothetical economy. The paper contributes a conceptual framework in general equilibrium modeling for economic policy analysis as a good start to understand the more complex general equilibrium models.

The New Generation of Computable General Equilibrium Models - Modelling the Economy

2018

The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Exercises in general equilibrium modeling Using GAMS

Microcomputers in Policy Research No. 4, International …, 1999

for helpful comments. Moataz El-Said also provided valuable research assistance. 3 GAMS (the General Algebraic Modeling System) consists of a language compiler and integrated solvers. GAMS has strong data processing facilities and can be used to solve a wide variety of optimization and simultaneous equation models. It is one of the most popular softwares for solving CGE models. The web site of the GAMS Development Corporation (www.gams.com) provides information on how to acquire the full-capacity versions of the software as well as access to a wide range of GAMS-related resources, including the manual (Brooke, Kendrick, Meeraus, and Raman, 1998). 15 PRODFN1.. QA('AGR-A') =E= ad('AGR-A')*QF('LAB','AGR-A')**alpha('LAB','AGR-A') *QF('CAP','AGR-A')**alpha('CAP','AGR-A');