Solving a Large-Scale Intertemporal Applied General Equilibrium Model
AbstractIntertemporal Computable General Equilibrium (CGE) models have the potential to quantify the implications of sectoral and temporal linkages which are often crucial for understanding the effects of economic shocks. However, such models will prove to be of practical use for policy analysis only if accurate solutions can be obtained at reasonable cost. Often, the usefulness of intertemporal CGE models for policy analysis is diminished because the degree of economic detail incorporated is compromised in order to maintain computational tractability. The purpose of this paper is to describe how Euler's method may be used to solve large-scale intertemporal CGE models without compromising significantly on the type and degree of economic detail modelled. In particular, there is no need to restrict the number of costate variables (e.g., by assuming that capital stocks are homogeneous) nor to assume that the solution will always be interior.
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Bibliographic InfoPaper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number op-74.
Date of creation: Jul 1992
Date of revision:
Find related papers by JEL classification:
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
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- K.R. Pearson, 1986.
"Automating the Computation of Solutions of Large Economic Models,"
Centre of Policy Studies/IMPACT Centre Working Papers
ip-27, Victoria University, Centre of Policy Studies/IMPACT Centre.
- Pearson, K. R., 1988. "Automating the computation of solutions of large economic models," Economic Modelling, Elsevier, vol. 5(4), pages 385-395, October.
- K.R. Pearson, 1991. "Solving Nonlinear Economic Models Accurately Via a Linear Representation," Centre of Policy Studies/IMPACT Centre Working Papers ip-55, Victoria University, Centre of Policy Studies/IMPACT Centre.
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