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Computable General Equilibrium (CGE)
Computable General Equilibrium (CGE)
technology application

Computable General Equilibrium (CGE)

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updatedAug 31, 2023
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An economic model that combines existing economic data with economic theory in order to computationally simulate the possible impacts of policies, technologies, or other factors that can affect the economy.
An economic model that combines existing economic data with economic theory in order to computationally simulate the possible impacts of policies, technologies, or other factors that can affect the economy.

Computable General Equilibrium (CGE) models aim to transform detailed economic data and behavioral responses of agents (households, firms, government) into a set of equations that capture the economy's structure. Its complex model allows collecting and simulating direct and indirect inter-sectoral, inter-regional, and inter-temporal effects caused by policy changes.

A CGE model database consists of tables of transaction values and elasticities. The first is represented in an input-output table or a Social Accounting Matrix (SAM) that distinguishes several sectors, commodities, primary factors, and household types, for instance. The second are flexible parameters that capture behavioral responses, including import and export demand changes.

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