Theory and Programming of Computable General Equilibrium (CGE) Models

10.1142/12335 ◽  
2021 ◽  
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Cge Models

scholarly journals The Issue of Macroeconomic Closure Revisited and Extended

2016 ◽  
Vol 66 (1) ◽  
pp. 1-31
Author(s):  
Ernő Zalai ◽  
Tamás Révész
Keyword(s):  
General Equilibrium ◽  
Open Economy ◽  
Computable General Equilibrium ◽  
Statistical Data ◽  
Competitive Equilibrium ◽  
Numerical Models ◽  
Cge Model ◽  
Sector Model ◽  
Cge Models ◽  
Policy Simulations

Léon Walras (1874) had already realised that his neo-classical general equilibrium model could not accommodate autonomous investments. In the early 1960s, Amartya Sen analysed the same issue in a simple, one-sector macroeconomic model of a closed economy. He showed that fixing investment in the model, built strictly on neo-classical assumptions, would make the system overdetermined, and thus one should loosen some neo-classical conditions of competitive equilibrium. He analysed three not neo-classical “closure options”, which could make the model well-determined in the case of fixed investment. His list was later extended by others and it was shown that the closure dilemma arises in the more complex computable general equilibrium (CGE) models as well, as does the choice of adjustment mechanism assumed to bring about equilibrium at the macro level. It was also illustrated through several numerical models that the adopted closure rule can significantly affect the results of policy simulations based on a CGE model. Despite these warnings, the issue of macro closure is often neglected in policy simulations. It is, therefore, worth revisiting the issue and demonstrating by further examples its importance, as well as pointing out that the closure problem in the CGE models extends well beyond the problem of how to incorporate autonomous investments into a CGE model. Several closure rules are discussed in this paper and their diverse outcomes are illustrated by numerical models calibrated on statistical data. First, the analyses are done in a one-sector model, similar to Sen’s, but extended into a model of an open economy. Next, the same analyses are repeated using a fully-fledged multi-sectoral CGE model, calibrated on the same statistical data. Comparing the results obtained by the two models it is shown that although they generate quite similar results in terms of the direction and — to a somewhat lesser extent — of the magnitude of change in the main macro variables using the same closure option, the predictions of the multi-sectoral CGE model are clearly more realistic and balanced.

scholarly journals Rice and Wheat Tariff Impact in Bangladesh: CGE Analysis Using Gtap Model

2019 ◽  
Vol 11 (10) ◽  
pp. 63
Author(s):  
Syed Shoyeb Hossain ◽  
Huang Delin
Keyword(s):  
General Equilibrium ◽  
South Asian ◽  
Equilibrium Model ◽  
Computable General Equilibrium ◽  
Computable General Equilibrium Model ◽  
General Equilibrium Model ◽  
Relative Price ◽  
Agricultural Crop ◽  
Asian Countries ◽  
Cge Models

Computable General Equilibrium (CGE) models are mostly used for agricultural market analysis globally. This paper constructs a Computable General Equilibrium model using Global Trade Analysis Project (GTAP) model followed by the GTAP 9A database. The primary aim of this paper is to analyze the potential impact of tariff increase on Agricultural crop sectors (Rice and Wheat) in Bangladesh and then describes the construction of the database. It also attempts to detect the trend of the tariff change impact on rice and wheat production in Bangladesh and other South Asian countries. Using database reference year 2011, this paper builds a computable general equilibrium model to measure the Tariff impact in Bangladesh. Result of the model suggests that if an import tariff is imposed, it will affect domestic-foreign relative price between Bangladesh and other south Asian countries. Bilateral trade between Bangladesh and South Asia country will decline sharply. Finally, this paper explained the policy scenario, data sources, and processing methods in details.

Constructing a Database for Computable General Equilibrium Modeling of Sydney, Australia, Transport Network

2017 ◽  
Vol 2606 (1) ◽  
pp. 54-62
Author(s):  
Edward Robson ◽  
Vinayak V. Dixit
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Transport Network ◽  
Data Sources ◽  
Input Output ◽  
Output Table ◽  
Cge Models ◽  
Level Of Aggregation ◽  
Future Work ◽  
Sydney Australia

In the search for benefits to justify transport projects, economic appraisals have increasingly incorporated the valuation of impacts to the wider economy. Computable general equilibrium (CGE) models provide a framework to estimate these impacts by simulating the interactions of urban economies and transport networks. In CGE models, households and firms are represented by microeconomic behavioral functions, and markets adjust according to prices. As markets both inside and outside the transport network are taken into account, a wide variety of measures that can assist in economic appraisals can be extracted. However, urban CGE models are computationally burdensome and require detailed, spatially disaggregate data. This paper discusses the methodology used to develop a database, including an input–output table, for the calibration of an urban CGE model for Sydney, Australia. Official and publicly available data sources were manipulated by using a number of mathematical and statistical techniques to compile a table for 249 regions and 20 sectors across Sydney. Issues, such as determining the appropriate level of aggregation, generating incomplete data, and managing conflicting data, that other input–output table developers may encounter when constructing multiregional tables were addressed in the study. The table entries themselves were mapped and explored, as they provide a useful study of the spatial economy of Sydney. Future work will focus on streamlining the construction of input–output tables and incorporating new data sources.

Simulating Impacts on Regional Economies

2013 ◽  
pp. 132-152 ◽  
Author(s):  
Guy R. West ◽  
Randall W. Jackson
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Full Range ◽  
Data Availability ◽  
Regional Economies ◽  
Input Output ◽  
Computable General Equilibrium Models ◽  
Sire Model ◽  
Cge Models ◽  
Regional Impacts

Practitioners and academics apply a range of regional economic models for impacts assessment. These models extend from a simple economic base through to input-output and econometric models and computable general equilibrium models. All such models have strengths and weaknesses. Dimensions of which impact assessment models are often compared include level of industry detail, data availability, and complexity of behaviour modelled. This chapter presents a model for Simulating Impacts on Regional Economies (SIRE) that occupies an intermediate position between Input-Output (IO), arguably the most widely used model for regional impacts assessments, and Computable General Equilibrium (CGE) models. With greater behavioural detail than the typical regional IO model, the SIRE model incorporates many of the features of CGE models without enforcing the strictly linear behavioural relationships of IO. Like most CGE models, the simulation framework presented here borrows a subset of parameters from an existing econometric model for the same region. The SIRE model falls short, however, of the complexity of capturing the full range of behaviours of CGE models.

Simulating Impacts on Regional Economies

2014 ◽  
pp. 1064-1083
Author(s):  
Guy R. West ◽  
Randall W. Jackson
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Full Range ◽  
Data Availability ◽  
Regional Economies ◽  
Input Output ◽  
Computable General Equilibrium Models ◽  
Sire Model ◽  
Cge Models ◽  
Regional Impacts

Practitioners and academics apply a range of regional economic models for impacts assessment. These models extend from a simple economic base through to input-output and econometric models and computable general equilibrium models. All such models have strengths and weaknesses. Dimensions of which impact assessment models are often compared include level of industry detail, data availability, and complexity of behaviour modelled. This chapter presents a model for Simulating Impacts on Regional Economies (SIRE) that occupies an intermediate position between Input-Output (IO), arguably the most widely used model for regional impacts assessments, and Computable General Equilibrium (CGE) models. With greater behavioural detail than the typical regional IO model, the SIRE model incorporates many of the features of CGE models without enforcing the strictly linear behavioural relationships of IO. Like most CGE models, the simulation framework presented here borrows a subset of parameters from an existing econometric model for the same region. The SIRE model falls short, however, of the complexity of capturing the full range of behaviours of CGE models.

scholarly journals Regional disaster impact analysis: comparing input–output and computable general equilibrium models

2016 ◽  
Vol 16 (8) ◽  
pp. 1911-1924 ◽  
Author(s):  
Elco E. Koks ◽  
Lorenzo Carrera ◽  
Olaf Jonkeren ◽  
Jeroen C. J. H. Aerts ◽  
Trond G. Husby ◽  
...  
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Geographical Area ◽  
Regional Distribution ◽  
Economic Losses ◽  
Input Output ◽  
Disaster Impact ◽  
Cge Models ◽  
Italian Regions

Abstract. A variety of models have been applied to assess the economic losses of disasters, of which the most common ones are input–output (IO) and computable general equilibrium (CGE) models. In addition, an increasing number of scholars have developed hybrid approaches: one that combines both or either of them in combination with noneconomic methods. While both IO and CGE models are widely used, they are mainly compared on theoretical grounds. Few studies have compared disaster impacts of different model types in a systematic way and for the same geographical area, using similar input data. Such a comparison is valuable from both a scientific and policy perspective as the magnitude and the spatial distribution of the estimated losses are born likely to vary with the chosen modelling approach (IO, CGE, or hybrid). Hence, regional disaster impact loss estimates resulting from a range of models facilitate better decisions and policy making. Therefore, this study analyses the economic consequences for a specific case study, using three regional disaster impact models: two hybrid IO models and a CGE model. The case study concerns two flood scenarios in the Po River basin in Italy. Modelling results indicate that the difference in estimated total (national) economic losses and the regional distribution of those losses may vary by up to a factor of 7 between the three models, depending on the type of recovery path. Total economic impact, comprising all Italian regions, is negative in all models though.

scholarly journals DAMPAK PEMBERLAKUAN BEA KELUAR TERHADAP KINERJA EKSPOR SEKTOR KELAUTAN DAN PERIKANAN INDONESIA

2016 ◽  
Vol 11 (2) ◽  
pp. 185
Author(s):  
Estu Sri Luhur ◽  
Tajerin Tajerin
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Raw Materials ◽  
Export Performance ◽  
Value Added ◽  
Processing Industry ◽  
Cge Models ◽  
Primary Products ◽  
Fishery Products ◽  
The Impact

Indonesia merupakan salah satu negara eksportir produk perikanan terbesar di dunia dengan komoditas unggulan udang, tuna, dan rumput laut. Namun, komoditas ekspor Indonesia masih didominasi oleh produk primer berupa bahan mentah sehingga nilai ekspor masih rendah. Tulisan ini bertujuan untuk menganalisis dampak pemberlakuan bea keluar terhadap produk primer perikanan terhadap kinerja ekspor sektor kelautan dan perikanan sebagai salah satu cara mengatasi permasalahan tersebut. Kajian ini menggunakan data sekunder dengan mengambil Tabel I-O tahun 2008 yang kemudian disusun dalam bentuk computable general equilibrium (CGE) dengan menggunakan model Orani-G. Komoditas yang dianalisis adalah ikan TTC, ikan tangkap lainnya, patin, kerapu, rumput laut, budidaya lainnya, udang, ikan kering dan ikan olahan. Kajian ini menggunakan simulasi dengan tiga skenario pemberlakuan bea keluar, yaitu 7,5% (sim-1), 15% (sim-2), dan 22,5% (sim-3). Hasil kajian menunjukkan bahwa skenario 3, yaitu pemberlakuan tarif bea keluar 22,5% memberikan dampak terbesar terhadap kinerja makroekonomi di antaranya  peningkatan GDP 0,01% dan konsumsi rumah tangga sebesar 0,046%. Dampak terhadap kinerja sektoral: 1) output dan nilai tambah produk primer perikanan mengalami penurunan terbesar pada ikan TTC sebesar 0,68%, sedangkan output dan nilai tambah produk olahan perikanan mengalami peningkatan terbesar pada ikan olahan sebesar 0,72%; 2)  ekspor produk primer perikanan mengalami penurunan terbesar pada udang sebesar 35,81%, sedangkan ekspor produk olahan perikanan mengalami peningkatan terbesar pada ikan olahan sebesar 2,41%; 3) impor produk primer perikanan produk olahan perikanan mengalami penurunan terbesar pada udang sebesar 23,09%.Title: Impacts of Export Duties to Marine and Fisheries Sector’s Export PerformanceIndonesia has one of the largest exporters of fisheries products in the world with leading commodity shrimp, tuna and seaweed. However, Indonesia's exports are still dominated by primary products such as raw materials so that the value of exports is still low. On the other hand, the development of fishery processing industry in the country is still plagued by a lack of supply of raw materials so that to this day processing industry relies heavily on imported products. This paper aims to analyze the impact of the imposition of export duties on primary products of fisheries on the export performance of marine and fisheries sector as one way of addressing the issue. This study uses secondary data by taking the 2008 IO table is then compiled in the form of Computable General Equilibrium (CGE) models using Orani-G. Commodities are analyzed TTC fish, catch more fish, catfish, grouper, sea grass, other farming, shrimp, dried fish and fish preparations. This study uses three scenarios simulated with the imposition of export duties, ie 7.5% (sim-1), 15% (sim-2), and 22.5% (sim-3). The results show that the impact of the imposition of export duties on macroeconomic performance including 0.01% increase in GDP and household consumption amounted to 0.046%. Impact on sectoral performance: 1) output and value added fishery primary products experienced the largest decline in fish TTC 0.68%, while the output and value added processed fishery products experienced the largest increase in fish preparations of 0.72%; 2) export of primary products fishery experienced the largest decline in shrimp by 35.81%, while exports of processed fishery products experienced the largest increase in fish processed by 2.41%; 3) imports of primary products fishery processed fishery products experienced the largest decline in shrimp at 23.09%.

scholarly journals A Numerical Investigation of the Potential for Negative Emissions Leakage

2013 ◽  
Vol 103 (3) ◽  
pp. 320-325 ◽  
Author(s):  
Niven Winchester ◽  
Sebastian Rausch
Keyword(s):  
General Equilibrium ◽  
Numerical Investigation ◽  
Computable General Equilibrium ◽  
Fossil Fuel ◽  
Factor Mobility ◽  
Fuel Supply ◽  
Cge Models ◽  
Empirical Estimates ◽  
Emissions Leakage ◽  
Negative Emissions

Emissions restrictions in one region may decrease emissions elsewhere (negative leakage), as increased demand for capital and labor to abate emissions in constrained regions may reduce output in unconstrained regions. We investigate leakage in computable general equilibrium (CGE) models under alternative fossil fuel supply elasticity values and factor mobility assumptions. We find that fossil fuel supply elasticities must be equal or close to infinity to generate net negative leakage. As empirical estimates for fossil fuel supply elasticities are less than 1, we conclude that leakage estimates from CGE models are unlikely to be negative.

A comparison of economic impact assessment methods: the case of forestry developments in Alberta

1998 ◽  
Vol 28 (5) ◽  
pp. 711-719 ◽  
Author(s):  
Janaki RR Alavalapati ◽  
Wiktor L Adamowicz ◽  
William A White
Keyword(s):  
General Equilibrium ◽  
Policy Analysis ◽  
Impact Assessment ◽  
Economic Impact ◽  
Computable General Equilibrium ◽  
Economic Impacts ◽  
Forest Policy ◽  
Input Output ◽  
Cge Models ◽  
Economic Impact Assessment

Economic impacts of forestry developments in Alberta are estimated using two interindustry approaches. The results suggest that estimates derived from input-output (I-O) models differ from those of computable general equilibrium (CGE) models. Employment and GDP estimates derived from CGE models are much smaller than those of I-O models. Unlike I-O estimates, estimates derived from CGE models are not unidirectional because of general equilibrium effects. The results also indicate that CGE models provide greater flexibility and have more potential for forest policy analysis when compared with I-O models, but they should be used with caution.

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