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Sequential Linking of Computable General Equilibrium and Microsimulation Models

  • Nicolas Hérault


    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Several approaches have recently been developed to combine a computable general equilibrium model (CGE) and a microsimulation (MS) model. These so-called CGE-MS models enjoy a growing interest because they build a bridge between macro- and microeconomic analyses. This paper focuses on the ‘top-down' approach. In this context, the CGE model is used to simulate the changes at the macroeconomic level after the policy change, which are then passed on to the MS model. The aim of this paper is to compare the ‘top-down' approach introduced by Robilliard et al. (2001) based on a behavioural MS model with an alternative and simpler approach making use of a non-behavioural MS model in combination with a reweighting procedure. Both approaches are presented and then applied to the case of trade liberalisation in South Africa. The reweighting approach introduces a small bias in the results, however without modifying the main conclusions. Given its relative simplicity compared to the behavioural approach, the reweighting approach seems to constitute a good alternative when data or time constraints do not allow the use of the behavioural approach and when the interest does not lie in the production of individual-level transition matrices.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2009n02.

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Length: 19 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:iae:iaewps:wp2009n02
Contact details of provider: Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
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  1. Maurizio Bussolo & Jann Lay, 2003. "Globalisation and Poverty Changes in Colombia," OECD Development Centre Working Papers 226, OECD Publishing.
  2. Luc Savard, 2005. "Poverty and Inequality Analysis within a CGE Framework: A Comparative Analysis of the Representative Agent and Microsimulation Approaches," Post-Print hal-00813583, HAL.
  3. D. Boccanfuso & F. Cabral & F. Cissé & A. Diagne & L. Savard, 2003. "Pauvreté et distribution de revenus au Sénégal: une approche par la modélisation en équilibre général calculable micro-simulé," Cahiers de recherche 0333, CIRPEE.
  4. Lixin Cai & John Creedy & Guyonne Kalb, 2004. "Accounting for Population Ageing in Tax Microsimulation Modelling by Survey Reweighting," Melbourne Institute Working Paper Series wp2004n26, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  5. John Creedy & Alan S. Duncan & Mark Harris & Rosanna Scutella, 2002. "Microsimulation Modelling of Taxation and the Labour Market," Books, Edward Elgar, number 2796, March.
  6. Nicolas Herault, 2007. "Trade Liberalisation, Poverty and Inequality in South Africa: A Computable General Equilibrium-Microsimulation Analysis," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 317-328, 09.
  7. N. Hérault, 2006. "Building And Linking A Microsimulation Model To A Cge Model For South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 74(1), pages 34-58, 03.
  8. Decaluwé, Bernard & Dumont, Jean-Christophe & Savard, Luc, 2000. "Measuring Poverty and Inequality in a Computable General Equilibrium Model," Cahiers de recherche 9926, Université Laval - Département d'économique.
  9. Bussolo, Maurizio & Lay, Jann & van der Mensbrugghe, Dominique, 2006. "Structural change and poverty reduction in Brazil : the impact of the Doha Round," Policy Research Working Paper Series 3833, The World Bank.
  10. Cathal O'Donoghue, 2001. "Introduction to the Special Issue on Dynamic Microsimulation Modelling," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 4(2), December.
  11. Chemingui, Mohamed Abdelbasset & Thabet, Chokri, 2008. "Agricultural Trade Liberalization and Poverty in Tunisia: Micro-simulation in a General Equilibrium Framework," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44466, European Association of Agricultural Economists.
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