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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.

Suggested Citation

  • Nicolas Hérault, 2009. "Sequential Linking of Computable General Equilibrium and Microsimulation Models," Melbourne Institute Working Paper Series wp2009n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2009n02

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    References listed on IDEAS

    1. Lixin Cai & John Creedy & Guyonne Kalb, 2006. "Accounting For Population Ageing In Tax Microsimulation Modelling By Survey Reweighting ," Australian Economic Papers, Wiley Blackwell, vol. 45(1), pages 18-37, March.
    2. Luc Savard, 2005. "Poverty and Inequality Analysis within a CGE Framework: A Comparative Analysis of the Representative Agent and Microsimulation Approaches," Development Policy Review, Overseas Development Institute, vol. 23(3), pages 313-331, May.
    3. 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.
    4. 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.
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    6. 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, March.
    7. BUSSOLO Maurizio & LAY Jann, "undated". "Globalization and Poverty Changes in Colombia," EcoMod2003 330700029, EcoMod.
    8. John Creedy & Alan S. Duncan & Mark Harris & Rosanna Scutella, 2002. "Microsimulation Modelling of Taxation and the Labour Market," Books, Edward Elgar Publishing, number 2796.
    9. 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.
    10. 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, September.
    11. Mohamed Abdelbasset Chemingui & Chokri Thabet, 2008. "Agricultural Trade Liberalization and Poverty in Tunisia: Micro-Simulation in a General Equilibrium Framework," Working Papers 402, Economic Research Forum, revised 03 Jan 2008.
    12. 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.
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    Cited by:

    1. Dolls, Mathias & Fuest, Clemens & Peichl, Andreas, 2012. "Automatic stabilizers and economic crisis: US vs. Europe," Journal of Public Economics, Elsevier, vol. 96(3), pages 279-294.

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