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Building and running general equilibrium models in EViews

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  • Essama-Nssah

Abstract

A crucial step in policy analysis involves computing consequences of policy actions. The author shows how to implement numerically a general equilibrium model in EViews. Computable general equilibrium models are now commonly used in both industrial and developing countries to assess the impact of external shocks or economic policies on the structure of the economy or the distribution of welfare. The current version of EViews offers a set of tools for building and solving simulation models in general. The same tools make it possible to conduct policy analysis within a general equilibrium framework. Based on the generalized Salter-Swan framework and macroeconomic data for Indonesia, the author shows how to process a social accounting matrix, specify and calibrate the model, and run simulations. The results replicate welfare and structural effects of shocks and policies consistent with the underlying conceptual framework. They also reveal the key role played by structural parameters, such as the elasticity of export transformation and that of import substitution, in determining the extent of structural adjustment to shocks and the relevance of the policy response.

Suggested Citation

  • Essama-Nssah, 2004. "Building and running general equilibrium models in EViews," Policy Research Working Paper Series 3197, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3197
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    References listed on IDEAS

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    Cited by:

    1. Essama-Nssah, B., 2005. "Simulating the poverty impact of macroeconomic shocks and policies," Policy Research Working Paper Series 3788, The World Bank.
    2. Ahmed, Vaqar & O' Donoghue, Cathal, 2007. "CGE-Microsimulation Modelling: A Survey," MPRA Paper 9307, University Library of Munich, Germany.
    3. Robilliard, Anne-Sophie & Robinson, Sherman, 2005. "The social impact of a WTO agreement in Indonesia," Policy Research Working Paper Series 3747, The World Bank.

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