Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Published in:
Cover of the book

2018 | OriginalPaper | Chapter

General Equilibrium Modelling: The Integration of Policy and Project Analysis

Authors : Federico Perali, Pasquale Lucio Scandizzo

Published in: The New Generation of Computable General Equilibrium Models

Publisher: Springer International Publishing

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

This chapter presents an overview of frontier topics of general equilibrium that are especially important to effectively integrate the policy and project dimensions of the equilibrium analysis. Project evaluation as a new frontier for modelling implies a general view of the traditional benefit-cost calculations that researchers can now afford implementing thanks to the recent computational developments that can host more realistic assumptions about model closures. A differential representation of general equilibrium permits also to unveil the opportunity cost structure associated with alternative resource uses of both policy and project evaluations. This extension enriches the policy content of both the micro and macro level of the equilibrium analysis. It takes advantage of the fact that in a modern policy and project analysis the micro-macro link exactly aggregates from the individual to the family, community, which is often the level of feasibility and impact analysis of large projects, and society level using micro and macro behavioural models that are closely integrated.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 390 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Maschinenbau + Werkstoffe




 

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
next chapter Demand-Driven Structural Change in Applied General Equilibrium Models
Footnotes
1
Since price elasticity equals 1, we have, equivalently: \( dg_{idt} = (g_{idt}^{1} - g_{idt}^{^\circ } )(\frac{{P_{Lit}^{1} - P_{Lit}^{^\circ } }}{{P_{Lit}^{1} }}) = (g_{idt}^{1} - g_{idt}^{^\circ } )(\frac{{L_{it}^{1} - L_{it}^{^\circ } }}{{L_{it}^{1} }}) \).
 
2
Note that, in order for (12) is derived from the equation: \( dX_{t} = \left( {A_{t} + \theta_{t} } \right)dX_{t} + \left( {dY_{t} + \psi dY_{t - 1} } \right) \), where \( A_{t} + \theta_{t} \) constitutes an “augmented” input-output coefficient matrix, which takes into account not only the transactions in the base year (through the initial i-o matrix \( A_{t} \), but also of the endogenous income and price effects (through the matrix \( \left. {\theta_{t} } \right) \). This augmented i-o must contains all the information to construct a social accounting matrix (SAM) that corresponds to a general equilibrium and must also be balanced, both in terms of transactions and coefficients (summing to 1 for each column), since the budget constraint will continue to hold for each sector when the endogenous incomes and prices are taken into account.
 
3
Bourguignon and Spadaro (2006) explain that performing a microsimulation entails three basic inputs: the policy rules to be evaluated describing, for example, a tax reform, an appropriate behavioural model of individual response to policy and an informative micro dataset.
 
4
We thankfully acknowledge Jean Mercenier for this integrated representation and for many fruitful discussions on frontier topics of general equilibrium.
 
Literature
Ahmed, V., & O’Donoghue, C. (2007). CGE-Microsimulation modelling: A survey. MPRA Paper No. 9307.
Arrow, K. J. (1951). An extension of the basic theorems of classical welfare economics. In J. Neyman (ed.), Proceedings of the Second Berkeley Symposium on Mathematical Statistics and Probability, .
Arrow, K. J., & Debreu, G. (1954). Existence of an equilibrium for a competitive economy. Econometrica, 22(3), 265–290.CrossRef
Bourguignon, F., & Spadaro, A. (2006). Microsimulation as a tool for evaluating redistribution policies. Journal of Economic Inequality, 4, 77–106.CrossRef
Bourguignon, F., Robilliard, A. S., & Robinson, S. (2005). Representative versus real households in the macroeconomic modelling of inequality. In T. J. Kehoe, T. N. Srinivasan, & J. Whalley (Eds.), Frontiers in applied general equilibrium modelling. Cambridge: Cambridge University Press.
Caiumi, A., & Perali, F. (1997). Female labor force participation: A comparison between urban and rural families. American Journal of Agricultural Economics, 79, 595–601.CrossRef
Caiumi, A., & Perali, F. (2015). Who bears the full cost of children? Evidence from a collective demand system. Empirical Economics.
Chavas, J. P., Menon, M., Pagani, E., & Perali, F. (2017). Collective household welfare and intra-household inequality. Theoretical Economics (forthcoming).
Chiappori, P. A. (1992). Collective labor supply and welfare. Journal of Political Economy, 100(3), 437–467.CrossRef
Chiappori, P. A., & Ekeland, I. (2011). New Developments in aggregation economics. Annual Review of Economics, 3, 631–668.CrossRef
Chiappori, P. A., & Lewbel, A. (2015). Gary Becker’s a theory of the allocation of time. Economic Journal, 125(583), 410–442.CrossRef
Cockburn, J., Corong, E., & Cororaton, C. (2010). Integrated computable general equilibrium (CGE) micro-simulation approach. International Journal of Microsimulation, 3(1), 60–71.
Cockburn, J., Savard, L., & Tiberti, L. (2014). Macro-micro models. In C. O’Donoghue (ed.), Handbook of microsimulation modelling, Contributions to economic analysis (Vol. 293, pp. 275–304). Emerald Group Publishing Limited.CrossRef
Colander, D. (1995). Marshallian general equilibrium analysis. Eastern Economic Journal, 21(3).
Dalla Chiara, E., Menon, M., & Perali, F. (2016). An integrated database to measure living standards. Working paper, Department of Economics, University of Verona.
Damania, R., & Scandizzo, P. L. (2016). The Serengeti ecosystem—Burden or bounty? Journal of Policy Modeling.
Davies, J. (2009). Combining microsimulation with CGE and macro modelling for distributional analysis in developing and transition countries. International Journal of Microsimulation, 49–65.
De Janvry, A., Fafchamps, M., & Sadoulet, E. (1991). Peasant household behavior with missing markets: some paradoxes explained. Economic Journal, 101, 1400–1417.CrossRef
Debreu, G. (1951). The coefficient of resource utilization. Econometrica.
Debreu, G. (1974). Excess-demand functions. Journal of Mathematical Economics, 1, 15–21.CrossRef
Devarajan, S., Go, D., Lewis, J., Robinson, S., & Sinko, P. (1997). Simple general equilibrium modeling. In J. Francois, & K. Reinert (Eds.), Applied Methods for trade policy analysis. Cambridge University Press.
Dixit, A. K., & Stiglitz, J. E. (1977). Monopolistic competition and optimum product diversity. American Economic Review, 67(3), 297–308.
Finizia, A., Magnani, R., & Perali, F. (2004). A general equilibrium analysis of the mid term review of the CAP on the Italian Economy. Rome: Franco Angeli.
Grosh, M., & Glewwe, P. (2000). Designing household survey questionnaires for developing countries: Lessons from 15 years of the living standards measurement study. World Bank.
Heckman, J. (2010). Building bridges between structural and program evaluation approaches to evaluating policy. Journal of Economic Literature, 48(2), 356–398.CrossRef
Imbens, G. (2010). Better LATE than nothing: Some comments on deaton (2009) and Heckman and Urzua (2009). Journal of Economic Literature, 48(2), 399–423.CrossRef
Jorgenson, D. W., & Samuels, J. (2014). Long-term estimates of U.S. productivity and growth. In: Prepared for Presentation at Third World KLEMS Conference Growth and Stagnation in the World Economy, Tokyo, 19–20 May 2014.
Jorgenson, D. W., Lau, L. J., & Stoker, T. M. (1980). Welfare comparisons and exact aggregation. American Economic Review, 70(2), 268–272.
Jorgenson, D., Goettle, R., Ho, M., & Wilcoxen, P. (2013). Double dividend. environmental taxes and fiscal reform in the united states. Cambridge, MA: The MIT Press.
Löfgren, H., & Robinson, S. (1997). The mixed-complementarity approach to specifying agricultural supply in computable general equilibrium models. In 1997 Conference, 10–16 August 1997, Sacramento, California, International Association of Agricultural Economists, No 197058.
Löfgren, H., & Robinson, S. (1999). To trade or not to trade: Non-separable farm household models in partial and general equilibrium. TMD Discussion Paper No. 37, IFPRI, Washington, D.C.
Magnani, R., & Mercenier, J. (2009). On linking microsimulation and computable general equilibrium models using exact aggregation of heterogeneous discrete-choice making agents. Economic Modelling, 26, 560–570.CrossRef
Mantel, R. (1974). On the characterization of aggregate excess-demand. Journal of Economic Theory, 7, 348–353.CrossRef
Matteazzi, E., Menon, M., & Perali, F. (2017). The collective farm-household model: Policy and welfare simulations. Applied Economic Perspectives and Policy, 39(1), 111–153.
McKenzie, L. W. (1959). On the existence of general equilibrium for a competitive economy. Econometrica, 27(1), 54–71.CrossRef
Mercenier, J., Álvarez-Martínez, M., Brandsma, A., Di Comite, F., Diukanova, O., Kancs, A., Lecca, P., López-Cobo, M., Monfort, P., Persyn, D., Rillaers, A., Thissen, M., & Torfs, W. (2016). Rhomolo v-2 model description. A spatial computable general equilibrium model for EU regions and sectors. JRC Technical reports, Valencia, Spain.
Norton, R., & Scandizzo, P. L. (1981). General equilibrium computations in activity analysis models. Operations Research, 29(2), 243–262.CrossRef
Pearl, J. (2013). Reflections on Heckman and Pinto’s `causal analysis after Haavelmo. UCLA cognitive systems laboratory, Technical report (R-420), Working Paper.
Peichl, A. (2016). Linking microsimulation and CGE models. International Journal of Microsimulation, 9(1), 161–175.
Savard, L. (2003). Poverty and income distribution in a CGE-household micro-simulation model: Top down/bottom up approach. Laval University, CIRPEE Working Paper 03–43, CIRPEE, Université Laval: Quebec.
Scandizzo, P. L. (1995). A general equilibrium analysis of ownership, property rights and control in a transition economy, ESA Working Paper (FAO), no. 02-01/ FAO, Rome (Italy).
Scandizzo, P. L. (2014). Equilibrium theory. In Encyclopaedia of Law and Economics. Springer.
Scandizzo, P. L., & Ferrarese, C. (2015). Social accounting matrix, a New Estimation Methodology. Journal of Policy Modeling.CrossRef
Scarf, H. E., & Hansen, T. (1973). The computation of economic equilibria. In Cowles foundation for research in economics at Yale University, Monograph No. 24, New Haven, CT and London, UK: Yale University Press.
Singh, I., Squire, L., & Strauss, J. (Eds.). (1986). Agricultural household models, extensions, applications and policy. Washington DC: The World Bank and The Johns Hopkins University Press.
Sonnenschein, H. (1972). Market excess-demand functions. Econometrica (The Econometric Society), 40(3), 549–563.CrossRef
Sonnenschein, H. (1973). Do Walras’ identity and continuity characterize the class of community excess-demand functions? Journal of Economic Theory, 6, 345–354.CrossRef
Stone, R., & Brown, A. (1962). A computable model for economic growth. Cambridge, UK: Cambridge Growth Project.
Taylor, E. (2012). A methodology for local economy-wide impact evaluation (LEWIE) of cash transfers. Working Paper, 99, International Policy Centre for Inclusive Growth.
Taylor, Ed, & Adelman, M. (2006). Village economies: The design, estimation, and Use of villagewide economic models. Cambridge, MA: Cambridge University Press.
Taylor, Ed, & Filipski, M. (2014). Beyond experiments in development economics. local economy-wide impact evaluation. Oxford, UK: Oxford University Press.CrossRef
The Wye Group. (2007). Rural households’ livelihood and well-being. statistics on rural development and agriculture. NY: United Nations.
Walbroeck, J. L., & Ginsburg, V. A. (1986). Activity analysis and general equilibrium modelling. Amsterdam: North Holland Publishing Co. Webley, O.
Wolff, E. N., Zacharias, A., Masterson, T., Eren, S., Sharpe, A., & Hazell, E. (2012). A comparison of inequality and living standards in Canada and the United States using an expanded measure of economic well-being. Working paper n. 703, Levy Economics Institute.
Metadata
Title
General Equilibrium Modelling: The Integration of Policy and Project Analysis
Authors
Federico Perali
Pasquale Lucio Scandizzo
Copyright Year
2018
Book
The New Generation of Computable General Equilibrium Models

Print ISBN: 978-3-319-58532-1

Electronic ISBN: 978-3-319-58533-8

Copyright Year: 2018

DOI
https://doi.org/10.1007/978-3-319-58533-8_1