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 InfoPaper provided by ERMES, University Paris 2 in its series Working Papers ERMES with number 0809.
Date of creation: 2008
Date of revision:
Other versions of this item:
- Magnani, Riccardo & Mercenier, Jean, 2009. "On linking microsimulation and computable general equilibrium models using exact aggregation of heterogeneous discrete-choice making agents," Economic Modelling, Elsevier, vol. 26(3), pages 560-570, May.
- 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.
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