Handbook of Computable General Equilibrium Modeling

Handbook of Computable General Equilibrium Modeling

1st Edition - November 14, 2012

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  • Editors: Peter Dixon, Dale Jorgenson
  • eBook ISBN: 9780444626318

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Top scholars synthesize and analyze scholarship on this widely used tool of policy analysis in 27 articles, setting forth its accomplishments, difficulties, and means of implementation. Though CGE modeling does not play a prominent role in top U.S. graduate schools, it is employed universally in the development of economic policy. This collection is particularly important because it presents a history of modeling applications and examines competing points of view.

Key Features

  • Presents coherent summaries of CGE theories that inform major model types
  • Covers the construction of CGE databases, model solving, and computer-assisted interpretation of results
  • Shows how CGE modeling has made a contribution to economic policy


Graduate students and professors worldwide working in all subdisciplines of economics and finance

Table of Contents

  • Introduction to the Series



    Chapter 1. Introduction

    1.1 Overview

    1.2 Single-country models

    1.3 Global models

    1.4 Technical aspects of CGE modeling: data, parameter estimation, computation and validation

    1.5 Current cutting-edge methodological areas


    Chapter 2. The MONASH Style of Computable General Equilibrium Modeling: A Framework for Practical Policy Analysis

    2.1 Introduction

    2.2 Telling a CGE Story

    2.3 From Johansen to ORANI

    2.4 Extending Johansen’s Computational Framework: The Mathematical Structure of a MONASH Model

    2.5 Responding to the Needs of CGE Consumers: The Four Closure Approach

    2.6 Concluding Remarks



    Chapter 3. Computable General Equilibrium Assessments of Fiscal Sustainability in Norway

    3.1 Introduction

    3.2 Model Structure

    3.3 Evaluating Fiscal Sustainability

    3.4 Sensitivity of the Fiscal Prospects to Variations in Economic Growth and Terms of Trade

    3.5 Norwegian Public Pension Reform

    3.6 Demographic Uncertainty

    3.7 Increasing Prefunding Through a Stricter Fiscal Policy Rule

    3.8 Final Remarks


    Chapter 4. MAMS – A Computable General Equilibrium Model for Developing Country Strategy Analysis

    4.1 Introduction

    4.2 Context and Main Contributions of MAMS

    4.3 Model Design

    4.4 Mathematical Structure of MAMS

    4.5 MAMS Database

    4.6 User-friendly Interface

    4.7 Applications: Policy Issues and Insights

    4.8 Conclusion


    Chapter 5. Contribution of Computable General Equilibrium Modeling to Policy Formulation in Developing Countries

    5.1 Introduction

    5.2 Types of CGE Models for Development Policy

    5.3 CGE Models and Policy Formulation

    5.4 Conclusions



    Chapter 6. Putting Services and Foreign Direct Investment with Endogenous Productivity Effects in Computable General Equilibrium Models

    6.1 Introduction

    6.2 Modeling Services and FDI in a Stylized Small CGE Model

    6.3 Impact of Liberalizing Barriers to FDI in Services: the Case of Russian Accession to the World Trade Organization

    6.4 Poverty Effects Of Russia’s Wto Accession: modeling “Real” Households With Fdi In Services And Endogenous Productivity Effects

    6.5 Policy Impacts and Other Model Applications and Extensions



    Chapter 7. Regional Computable General Equilibrium Modeling

    7.1 Introduction

    7.2 What Regional Models Can Tell Us

    7.3 Short Review of the Development of Regional CGE Models

    7.4 A Modern Multiregional CGE Model

    7.5 Constructing (Multi)regional Databases

    7.6 Simulations and Interpretation of Multiregional Model Mechanisms

    7.7 Concluding Remarks



    Chapter 8. Energy, the Environment and US Economic Growth

    8.1 Introduction

    8.2 IGEM

    8.3 Intertemporal Equilibrium and Economic Growth

    8.4 Welfare measurement

    8.5 Evaluation of climate policy

    8.6 Conclusions


    Chapter 9. Computable General Equilibrium Modeling of Environmental Issues in Australia

    9.1 Introduction

    9.2 MMRF

    9.3 Additional Enhancement for ETS Modeling

    9.4 Base Case

    9.5 ETS Simulation Design

    9.6 Economic Effects of the ETS

    9.7 Conclusion


    Chapter 10. Taxation, Efficiency and Economic Growth

    10.1 Introduction

    10.2 Modeling Economic Growth

    10.3 Modeling Consumer and Producer Behavior

    10.4 Economic Impact of Tax Reform

    10.5 Income Tax Reform

    10.6 Consumption Tax Reform

    10.7 Conclusions



    Chapter 11. Dynamic Overlapping Generations Computable General Equilibrium Models and the Analysis of Tax Policy: The Diamond–Zodrow Model

    11.1 Introduction

    11.2 Brief History of OLG-CGE Modeling of Tax Reform

    11.3 Overview of the DZ model

    11.4 Applications of the DZ Model

    11.5 Conclusion


    Chapter 12. Global Applied General Equilibrium Analysis Using the Global Trade Analysis Project Framework

    12.1 Introduction: what is GTAP and why has it succeeded?

    12.2 Design of the standard gtap modeling framework

    12.3 Model validation and systematic sensitivity analysis

    12.4 Software and implementation issues

    12.5 GTAP-based analysis of global economic integration

    12.6 CGE modeling of global environmental issues

    12.7 Future directions for GTAP



    Chapter 13. Estimating Effects of Price-Distorting Policies Using Alternative Distortions Databases

    13.1 Introduction

    13.2 Concern with Missing Price-Distorting Measures

    13.3 Concern with the Counterfactual

    13.4 Concern with Tariff Aggregation

    13.5 Conclusions



    Chapter 14. Modeling the Global Economy – Forward-Looking Scenarios for Agriculture

    14.1 Introduction

    14.2 Global Modeling at the World Bank

    14.3 Model Specification

    14.4 Macroeconomics of the baseline scenario

    14.5 Agriculture towards 2050

    14.6 Climate Change and its Impacts

    14.7 Concluding Thoughts



    Chapter 15. A Global Approach to Energy and the Environment

    15.1 Introduction

    15.2 Structure of the Model

    15.3 Summary of Key Applications and Insights

    15.4 Sample Applications

    15.5 Conclusion



    Chapter 16. Integrated Economic and Climate Modeling

    16.1 Introduction

    16.2 Dice and Rice Models as Examples of IAMs

    16.3 Illustrative Model Results: The Copenhagen Accord

    16.4 Some Major Issues for Research in IAM

    16.5 Final Thoughts



    Chapter 17. An Econometric Approach to General Equilibrium Modeling

    17.1 Introduction

    17.2 Econometric Modeling of Producer Behavior

    17.3 Application of the Kalman Filter

    17.4 Instrumental Variables and Specification Tests

    17.5 Empirical Results on Producer Behavior

    17.6 Econometric Modeling of Consumer Behavior

    17.7 Data Issues in Modeling Consumer Behavior

    17.8 Aggregate Demands for Goods and Leisure

    17.9 Intertemporal Allocation of Full Consumption

    17.10 Computing Confidence Intervals

    17.11 Conclusions



    Chapter 18. Trade Elasticity Parameters for a Computable General Equilibrium Model

    18.1 Introduction

    18.2 Why do trade elasticities matter?

    18.3 Import demand elasticities

    18.4 Export supply

    18.5 Gravity, trade costs and structural estimation


    Chapter 19. Validation in Computable General Equilibrium Modeling

    19.1 Introduction

    19.2 Checking the Code: Homogeneity Tests and Other Checking Simulations

    19.3 Validation Through the Gdp Identity

    19.4 Validation Through Back-of-The-Envelope (Bote) Analysis and Other Plausibility Checks

    19.5 Consistency with History

    19.6 Forecasting Performance

    19.7 Conclusion



    Chapter 20. Solution Software for Computable General Equilibrium Modeling

    20.1 Introduction

    20.2 Early Days

    20.3 General-Purpose Software

    20.4 Levels and Change Solution Methods

    20.5 General Features of CGE Models

    20.6 Three Representations of a Simple Model

    20.7 Curse of Dimensionality

    20.8 Checking and Debugging Models

    20.9 Comparing Features of Gams and Gempack

    20.10 Concluding Remarks


    Chapter 21. Income Distribution in Computable General Equilibrium Modeling

    21.1 Introduction

    21.2 Static Distribution Oriented Macro–Micro Models Based on Walrasian CGE

    21.3 Static Macro–Micro Distributional Models with Real or Apparent Labor Market Imperfections

    21.4 Dynamic Macro–Micro Modeling

    21.5 Gidd Model as an Example of a Global Dynamic Macro–Micro Model

    21.6 Concluding Remarks


    Chapter 22. The New Keynesian Approach to Dynamic General Equilibrium Modeling: Models, Methods and Macroeconomic Policy Evaluation

    22.1 Introduction

    22.2 The New Keynesian Approach to Monetary Economics: A Brief History Of Thought

    22.3 Building New Keynesian Models

    22.4 Methods for Model Solution and Estimation

    22.5 A New Approach to Model Comparison and Policy Evaluation

    22.6 Policy Evaluation and Robustness under Model Uncertainty

    22.7 Open Questions and Future Research



    Chapter 23. Computing General Equilibrium Theories of Monopolistic Competition and Heterogeneous Firms

    23.1 Introduction

    23.2 Trade Theories

    23.3 General Equilibrium Formulation

    23.4 Computation as a Companion to Theory

    23.5 Calibration

    23.6 Decomposition Strategy for Computation of Large Models

    23.7 Applications

    23.8 Conclusion


    Chapter 24. Market Structure in Multisector General Equilibrium Models of Open Economies

    24.1 Introduction

    24.2 Oligopoly

    24.3 Monopolistic Competition

    24.4 Model Selection and Validation

    24.5 Summary



    Chapter 25. Computable General Equilibrium Modeling of Market Access in Services

    25.1 Introduction

    25.2 Definitional and Data Issues

    25.3 Conceptual Issues

    25.4 Implementation Issues

    25.5 Models of Services Liberalization

    25.6 Modes of Supply and Sector Specificity

    25.7 An Example

    25.8 Setting Future Research Priorities

    25.9 Conclusions



    Chapter 26. The Labor Market in Computable General Equilibrium Models

    26.1 Introduction

    26.2 A Classification of Labor-Market Related Questions

    26.3 Labor Supply

    26.4 Labor Demand

    26.5 Labor Market Coordination

    26.6 Welfare Analysis

    26.7 Conclusions



    Chapter 27. Generational Policy and Aging in Closed and Open Dynamic General Equilibrium Models

    27.1 Introduction

    27.2 Preliminaries: Modeling of Aging, Retirement and Idiosyncratic Income Risk

    27.3 Closed-Economy Model for Germany

    27.4 Multiregional world model

    27.5 Summary of results



    Index-Volume 1A

    Index-Volume 1B

Product details

  • No. of pages: 1896
  • Language: English
  • Copyright: © North Holland 2012
  • Published: November 14, 2012
  • Imprint: North Holland
  • eBook ISBN: 9780444626318

About the Editors

Peter Dixon

Sir John Monash Distinguished Professor, Centre of Policy Studies, Monash University, Australia

Affiliations and Expertise

Professor and Principal Researcher, Centre of Policy Studies, Monash University, Victoria, Australia

Dale Jorgenson

Professor of Economics, Harvard University, Cambridge, Mass USA

Affiliations and Expertise

Professor of Economics, Harvard University, Cambridge Mass USA

Ratings and Reviews

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  • Long Z. Wed Jan 24 2018

    Excellent paper series

    These are must-read bundle of papers about CGE modelling, which covers various topics within this area. Going through all these will definitely help develop a CGE modelling expertise.