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Computable Equilibrium Modelling and Application to Economies in Transition

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  • Erno Zalai

Abstract

This paper examines the development and implementation of computable general equilibrium (CGE) models and examines their application to economies undergoing transition. The generalised development of a CGE model is presented in terms of the series of 'building blocks' which comprise a typical CGE system, whilst the flexibility of the CGE approach is illustrated by comparison of two specific CGE models: the GEM-E3 framework, developed by a team of researchers, led by Professor Pantelis Capros, based at the National Technical University of Athens, and the Hungarian Multisectoral (HUMUS) model framework, developed by a team, led by the author, from the Budapest University of Economic Sciences. The paper then examines the issue of closure rules in CGE models, and details the manner in which closure rules may be chosen to reflect specific features of the economy under study, particularly when applying CGE analysis to economies under transition. Finally the paper analyses the implementation and simulation of CGE models, including the steps necessary to construct benchmark datasets, calibrate the models, and to estimate counterfactual solutions.

Suggested Citation

  • Erno Zalai, 1998. "Computable Equilibrium Modelling and Application to Economies in Transition," CERT Discussion Papers 9804, Centre for Economic Reform and Transformation, Heriot Watt University.
    • Handle: RePEc:hwe:certdp:9804
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    Cited by:

    1. Svetla Boneva, 2003. "The set of tools for evaluation of expenses on and benefits from the expansion of the European Union to the East," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 79-108.
    2. Scrieciu, Silviu Serban, 2004. "Assessing the Economic Impacts of Incorporating Romania's Agricultural and Food Sectors into EU's Customs Union: An Applied General Equilibrium Approach," Development Economics and Public Policy Working Papers 30543, University of Manchester, Institute for Development Policy and Management (IDPM).
    3. Rodica Sandu-Loisel, 2007. "Hardened Budget Constraints in Romania: An Approach by CGE Modeling," Post-Communist Economies, Taylor & Francis Journals, vol. 19(1), pages 93-115.

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    More about this item

    Keywords

    computable general equilibrium; closure rules; GEM-E3; HUMUS.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

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