Computable General Equilibrium (CGE)
Kitti Kornkasame @ 123rf.com
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.