Computable General Equilibrium Models for the Analysis of Energy and Climate Policies

Book/Chapter
Computable General Equilibrium Models for the Analysis of Energy and Climate Policies
Sue Wing, Ian (2009)
International Handbook of the Economics of Energy, Evans, J., and L.C. Hunt (eds.), Edward Elgar, Chapter 14

Abstract/Summary:

This paper is a simple, rigorous, practically-oriented exposition of computable general equilibrium (CGE) modeling. The general algebraic framework of a CGE model is developed from microeconomic fundamentals, and employed to illustrate (i) how a model may be calibrated using the economic data in a social accounting matrix, (ii) how the resulting system of numerical equations may be solved for the equilibrium values of economic variables, and (iii) how perturbing this equilibrium by introducing tax or subsidy distortions facilitates analysis of policies' economy-wide impacts.

Citation:

Sue Wing, Ian (2009): Computable General Equilibrium Models for the Analysis of Energy and Climate Policies. International Handbook of the Economics of Energy, Evans, J., and L.C. Hunt (eds.), Edward Elgar, Chapter 14 (http://www.e-elgar-environment.com/bookentry_main.lasso?id=12764)
  • Book/Chapter
Computable General Equilibrium Models for the Analysis of Energy and Climate Policies

Sue Wing, Ian

Evans, J., and L.C. Hunt (eds.), Edward Elgar, Chapter 14

Abstract/Summary: 

This paper is a simple, rigorous, practically-oriented exposition of computable general equilibrium (CGE) modeling. The general algebraic framework of a CGE model is developed from microeconomic fundamentals, and employed to illustrate (i) how a model may be calibrated using the economic data in a social accounting matrix, (ii) how the resulting system of numerical equations may be solved for the equilibrium values of economic variables, and (iii) how perturbing this equilibrium by introducing tax or subsidy distortions facilitates analysis of policies' economy-wide impacts.