Introduction n recent years, there has been a significant evolution in the formulation and communication of monetary policy at a number of central banks around the world. It may be used in courses on economics principles, microeconomics, macroeconomics, public finance, environmental economics, and international trade and finance, because it shows. Handbook of computable general equilibrium modeling volume 1b handbooks in economics. This chapter introduces students to computable general equilibrium cge models, a class of economic model that describes an economy as a whole and the interactions among its parts. The basic structure of a cge model and its database are described. It is the preferred framework of most central government agencies and it is the only framework capable of reliably capturing the full suite of impacts that flow from major changes in the economy. Introduction to computable general equilibrium models by. Chapter 1 computable general equilibrium modelling for policy. A computable general equilibrium cge model is a distinctive kind of economic model. Jan 01, 2002 the purpose of this manual is to contribute to and facilitate the use of computable general equilibrium cge models in the analysis of issues related to food policy in developing countries. Introduction to computable general equilibrium models by mary. The latter task, statistical inference in economics, is discussed in this book. The paper presents rarely used in poland research method which is the computable model of general equilibrium.
E3me is a macroeconometric model designed to assess global policy challenges. Cge models are large numerical models which combine economic theory with real economic data in order to derive computationally the impacts of policies or shocks in the economy. The craft of economic modeling university of maryland. Applying a fully dynamic cge model with heterogeneous capital, resource and energy economics, elsevier, vol. The book is required reading for anyone wishing to understand the power and range of computable general equilibrium modelling as an input to strategy analysis and policy making. Rapid assessments of the economic implications of terrorism. The model derives a solution by finding a new set of prices and allocation of goods and factors such that the economy is in an equilibrium again. Larry dwyer, university of new south wales the rich cge applications presented in this volume show that cge modeling is a vital tool for policy analysis. Purchase handbook of computable general equilibrium modeling, volume 1a1b 1st edition. An introduction to computable general equilibrium modeling escap. Peter bishop dixon ao fassa born 23 july 1946 is an australian economist known for his work in general equilibrium theory and computable general equilibrium models. Introduction computable general equilibrium models 2nd edition.
Many of these banks now present their economic outlook and policy. Textbook of computable general equilibrium modelling. Cge models been widely used for investigating the impacts of economic integration, ecotaxes on environmental problems, regulatory reforms, taxation reforms and transportation system planning. Theoretical studies related to the wto activities are also presented. The mit joint program on the science and policy of global change is an organization for research, independent policy analysis, and public education in global environmental change. To ensure that the model is consistent and you have not made errors in coding, in general your first step. The book uses a graphical approach to explain the economic theory that underlies a cge model, and provides results from simple, smallscale cge models to.
The book focuses on the application on a speciallyadapted dynamic version of the term model to australian drought problems and watermanagement policies. General equilibrium is the backbone of modern economic analysis and as such generation after generation of economics students are introduced to it. The standard economic model of computable general equilibrium cge, with its core assumptions of selfregarding rational actors and perfect competition, is obsolete, and evolutionary theory can provide a new framework for the study of social and economic systems. The book uses a graphical approach to explain the economic theory that underlies a cge model, and provides results from simple, smallscale cge models to illustrate the links between theory. The volume includes a detailed presentation of a static standard cge model and its required database and incorporates features of particular importance in. Computable general equilibrium modeling and gtap general equilibrium, which dates back to leon walras 18341910, is one of the crowning intellectual achievements of economics. Computable general equilibrium models are widely used by governmental organizations and academic institutions to analyze the economywide effects of. The book explains cge modeling in a clear, az approach.
It may be used in courses on economics principles, microeconomics, macroeconomics, public finance, environmental economics and international trade and finance, because it shows. Cge framework encompasses both the io and sam frameworks by making demand and supply of commodities and factors dependent on prices. The purpose of this manual is to contribute to and facilitate the use of computable general equilibrium cge models in the analysis of issues related to food policy in developing countries. Costa rica trade liberalization, fiscal imbalances, and macroeconomic policy. The third edition of introduction to computable general equilibrium models provides students with a handson introduction to cge modeling utilizing the gtap v7 model, and it serves as a desk reference for experienced modelers. Computable general equilibrium cge models are a class of economic models that use actual economic data to estimate how an economy might react to changes in policy, technology or other external factors. Structure the course is delivered fully online and supported by the textbook, introduction to computable general equilibrium models, 2e, the ebook version of which will be provided to all participants. The general algebraic framework of a cge model is developed from microeconomic fundamentals, and employed to illustrate i how a model may be cali. An introduction to computable general equilibrium modeling. Introduction to computable general equilibrium models 1 economic models, economists toys 1 what is a computable general equilibrium model. Elements of a computable general equilibrium model 16 sets 17. Rather, it leads the reader directly into practice, for it is. I will use this book as my seminal cge reference and will also use this book for my graduate cge course.
The data requirements used to construct a cge model are small when compared to the number of model parameters calibration. Cge models are also referred to as age applied general equilibrium models. The author also does an excellent job connecting economic theory to empirical applications of gams. Sections of this book may be reproduced without the express. Applied general equilibrium an introduction manuel. Textbook of computable general equilibrium modeling. Dynamic stochastic general equilibrium modeling abbreviated as dsge, or dge, or sometimes sdge is a method in macroeconomics that attempts to explain economic phenomena, such as economic growth and business cycles, and the effects of economic policy, through econometric models based on applied general equilibrium theory and microeconomic principles. In distinction from the econometric models, where we assume that the investigated. A cge model consists of equations describing model variables. Cge modeling for regional economic development analysis, economics working paper series 0706, oklahoma state university, department of economics and legal studies in business. This book discusses computable general equilibrium models, their use for the analysis of economic policies, and their properties and implications.
When a students begins to learn general equilibrium modeling with gamsmpsge, it is easy to lose sight of underlying methodology because a number of steps are automated by the software. Economic modeling of water the australian cge experience. Since 1993, the centre of policy studies cops has developed monash, a dynamic computable general equilibrium cge model of the australian economy designed for forecasting and for policy analysis. Prepared for the international handbook of energy economics abstract this chapter is a simple, rigorous, practicallyoriented exposition of computable general equilibrium cge modeling. This book is a practical, howto guide to cge models that is suitable for. The book uses a graphical approach to explain the economic theory that underlies a cge model, and provides results from simple, smallscale cge models to illustrate the links between theory and model outcomes. This book applies cge modelling to some of the most. It moves on to an adaptation of term to water policy, including the additional theoretical and database requirements of the dynamic termh2o model. Handbook of computable general equilibrium modeling set, vols. This book provides an accessible, undergraduatelevel introduction to computable general equilibrium cge models, a class of model that has come to play an important role in government policy decisions.
This book is based on extensive teaching experience and is an excellent introduction to the theory and practice of computable general equilibrium cge models. This book provides a practical, howto guide to cge models suitable for use at the undergraduate college level. To solve the model you typically need the first order conditions and the equilibrium conditions. Mathematically speaking an equilibrium is a fixed point of a system of equations, i.
Dynamic modeling and applications in global economic analysis, cambridge university press. It recognizes that there are many markets and that they interact in complex ways so that loosely speaking, everything depends on everything else. Introduction to computable general equilibrium models. A major practical contribution of the book is to show how largescale armington models such as gtap can be converted to melitz by the addition of a small number of equations and minimal alteration of the. The monash model a dynamic general equilibrium model of the australian economy. The book provides a comprehensive atoz guide for computable general equilibrium cge models, which can analyze various economic issues empirically. Introduction to computable general equilibrium models by mary e. The new generation of computable general equilibrium. This cgebased analysis is an important contribution to the current debate surrounding carbon tax and its possible impact on macroeconomic growth. It seeks to provide leadership in understanding scientific, economic, and ecological aspects of this difficult issue, and combining them into policy.
Economic consequences of terrorism and natural disasters. Cge modeling for regional economic development analysis. This book employs a computable general equilibrium cge model a widely used economic model which uses actual data to provide economic analysis and policy assessment and applies it to economic data on singapores tourism industry. The monash style of computable general equilibrium modeling. A standard computable general equilibrium cge model in gams, by hans lofgren, rebecca lee har. Introduction to computable general equilibrium models mary e burfisher this book provides an accessible, undergraduatelevel introduction to computable general equilibrium cge models, a class of model that has come to play an important role in government policy. Ghg emissions and economic growth a computable general. Monash models are represented as linear systems of the form. He has published several books and more than two hundred academic papers on economic modelling and economic policy analysis. One of the first steps in building capacity has been the development of a new cge model called sage a recursive acronym for sage is an applied general equilibrium model.
Equilibrium cge model in gams, by hans lofgren, rebecca lee har ris, and sherman robinson, with assistance from marcelle thomas and moataz elsaid, is to contribute to and facilitate the use of. Theoretical and statistical studies of demand, production and prices. The australian cge experience, edited by glyn wittwer. The principal example in the first two parts of the book is a macroeconomic model of the usa. The book uses a graphical approach to explain the economic theory that underlies a cge model, and provides results from simple, smallscale cge models to illustrate the links between theory and model. The treatment of private household preferences using the nonhomothetic cde functional form.
A wellknown computable general equilibrium cge model, the global trade analysis project gtap, is modified and used to predict global economic shifts that would be triggered by two scenarios. North american journal of economics and finance 10. Written at an advanced undergraduate level, the book is suitable for both students and professionals who want to gain skills as producers or consumers of cgebased economic. It is the preferred framework of most central government agencies and it is the only framework capable of reliably capturing the full suite of. If you would like to add a book s to this list, please email jeremy douglas hertel, thomas w. Introduction to computable general equilibrium models computable general equilibrium cge models are widely used by governmental organizations and academic institutions to analyze the economywide effects of events such as climate change, tax policies, and immigration. Assessing the economic impact of tourism springerlink. Mit joint program on the science and policy of global change. Trade theory in computable general equilibrium models. The book provides a handson introduction to computable general equilibrium cge models, with a graphical treatment of economic theory and. Rimmer, glyn wittwer, adam rose, nathaniel heatwole edited by ali e. Computable general equilibrium cge models are widely used by governmental organizations and academic institutions to analyze the economywide effects of events such as climate change, tax policies, and immigration.
Exportled growth, inequality and poverty in latin america, routledge studies in development economics, new york, 2006 that used a cge model to investigate the impact of trade openness on employment, poverty and inequality in brazil my chapter was entitled brazil the impact of trade openness on employment, poverty and inequality and. Like its predecessor, orani, monash has a high level of microeconomic detail. Sage is a cge model of the united states economy developed to aid in the analysis of environmental regulations and policies. The book goes beyond sam and applies computable general equilibrium cge modelling to derive climatechange policy analysis and simulations. Part ii continues analysis and shows application of cge model to a specific case study. This paper is a simple, rigorous, practicallyoriented exposition of computable general equilibrium cge modeling. The title, the craft of economic modeling, emphasizes that the book does not stop with the theory or even with a few examples. Computable general equilibrium models for the analysis of. The book provides intuitive and graphical explanations of the economic theory that underlies a cge model and includes many examples and handson modeling exercises. Introduction to computable general equilibrium models book. The book details the innovative term the enormous regional model approach to regional and national economic modeling, and explains the conversion from a comparativestatic to a dynamic model. The new generation of computable general equilibrium models. A standard computable general equilibrium cge model in.
Provides an introduction to computable general equilibrium cge modelling and the key features of our inhouse cge model. A practical guide to trade policy analysis aims to help researchers and policymakers update their knowledge of quantitative economic methods and data sources for trade policy analysis. The volume includes a detailed presentation of a static standard cge model and its required database and incorporates features of particular. Some cge models, such as the one used by the scottish government, are able to trace the path of adjustment to the new steadystate, whereas static ones will show longrun changes only. Handbook of computable general equilibrium modeling, volume. Creating gradecat generalized, regional and dynamic economic consequence analysis tool. The book is an outcome of a recent workshop of the italian development economists association attended by a group of leading practitioners involved in the generation of cge models and research on modeling the economy and policy making. Cge modelling is the leading analytical approach for assessing the impacts of major projects and policy changes on the economy. It is grounded in the fundamentals of microeconomics. Computable general equilibrium modelling to describe the euler method in the context of cge modelling we start by rewriting 2. A cge model simulates the working of a market economy in which prices and quantities adjust to clear all markets. If you would like to add a book s to this list, please email jeremy douglas. The computable general equilibrium approach by peter b.
Popular cge books and articles the following books and articles have been recommended as good books in the field of cge modeling. The general algebraic framework of a cge model is developed from microeconomic fundamentals, and employed to illustrate i how a model may be calibrated using the economic data in a social accounting matrix, ii how the resulting system of numerical equations may be solved for. For computable general equilibrium cge modelers, the book shows how melitzstyle cge models can be calibrated, solved and interpreted. Shows how cge modeling has made a contribution to economic policy. This advanced textbook aims at providing a simple but fully operational introduction to applied general equilibrium. Cge modeling for regulatory analysis environmental. A standard computable general equilibrium cge model in gams. Finally, part i of this book discusses one of the most useful methods of examining economic consequences of being wto member, namely computable general equilibrium cge models. Current gtap model standard model the standard gtap model is a multiregion, multisector, computable general equilibrium model, with perfect competition and constant returns to scale. Apr 03, 2019 introduction to computable general equilibrium models by burfisher, mary abstract this book is a practical, introductory, howto guide to cge models. The book provides a handson introduction to computable general equilibrium cge models, with a graphical treatment of economic theory and guided cge modeling exercises. Economics, mathematics, econometrics and mathematical methods. It links the models to policy issues, describing the relevant theory and examples of cge analysis of particular issues, and it also provides students with handson experience with. Handbook of computable general equilibrium modeling.
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