On linking microsimulation and computable general equilibrium models using exact aggregation of heterogeneous discrete-choice making agents
AbstractOur paper contributes by bridging the gap between the (partial equilibrium) microsimulation and the computable general equilibrium (CGE) approaches, by making use of exact aggregation results from the discrete choice literature: heterogeneous individuals choosing within a set of discrete alternatives may be aggregated into a representative agent with (possibly multiple-level) constant elasticity-of-substitution/transformation preferences/technologies. These results therefore provide a natural link between the two policy evaluation approaches. We illustrate the usefulness of these results by evaluating potential effects of population ageing on the dynamics of income distribution and inequalities, using a simple overlapping generations model where individuals make leisure/work decisions, and choose a profession among a discrete set of alternatives.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 26 (2009)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/inca/30411
Microsimulation CGE models Exact aggregation Discrete choice Nested multinomial logit Population ageing Income inequality;
Other versions of this item:
- Riccardo Magnani & Jean Mercenier, 2009. "On linking microsimulation and computable general equilibrium models using exact aggregation of heterogeneous discrete-choice making agents," Post-Print halshs-00627736, HAL.
- Magnani R. & Mercenier J., 2008. "On Linking Microsimulation and Computable General Equilibrium Models Using Exact Aggregation of Heterogeneous Discrete-choice Making Agents," Working Papers ERMES 0809, ERMES, University Paris 2.
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