Introduction to Computable General Equilibrium Models，3rd Edition
by Mary E. Burfisher  (Author)

About the Author
Mary E. Burfisher is Senior Education Advisor at the Center for Global Trade Analysis at Purdue University and an adjunct professor at the University of Maryland Global Campus.

About this Book
Computable general equilibrium (CGE) models play an important role in supporting public-policy making on such issues as trade, climate change and taxation. This significantly revised volume, keeping pace with the next-generation standard CGE model, is the only undergraduate-level introduction of its kind. The volume utilizes a graphical approach to explain the economic theory underlying a CGE model, and provides results from simple, small-scale CGE models to illustrate the links between theory and model outcomes. Its eleven hands-on exercises introduce modelling techniques that are applied to real-world economic problems. Students learn how to integrate their separate fields of economic study into a comprehensive, general equilibrium perspective as they develop their skills as producers or consumers of CGE-based analysis.

Brief Contents
About This Book 1
    Objectives 1
    What’s New in the Third Edition 3
    Organization 4
    Resources for New CGE Modelers 6
    For the Instructor 7
1 Introduction to Computable General Equilibrium Models 9
    Economic Models, Economists’ Toys 9
    What Is a Computable General Equilibrium Model? 11
    A Standard CGE Model 16
    CGE Model Structure 17
    CGE Model Database 17
    CGE Model Applications 19
    Summary 20
    Key Terms 21
    Practice and Review 21
2 Elements of a Computable General Equilibrium Model 25
    Sets 26
    Endogenous Variables 27
    Exogenous Variables 29
    Model Closure 29
    Exogenous Parameters 29
    Equations 42
    Macroclosure 43
    Nonlinear and Linearized CGE Models 45
    Model Calibration 48
    Composite Commodities, Factors, and Prices 50
    Normalizing Prices 51
    Price Linkages 53
    Numeraire 58
    Structure of a CGE Model 60
    Summary 62
    Key Terms 62
    Practice and Review 63
3 The CGE Model Database 66
    Introduction to the Social Accounting Matrix 67
    Accounts in a SAM 68
    Microeconomic Data in a SAM 77
    Macroeconomic Data in a SAM 78
    Structure Table 81
    Extending the SAM: Non-diagonal Make Matrix 89
    Extending the SAM: Domestic Trade Margins 92
    Extending the SAM: Multi-region Input–Output (MRIO) 95
    Updating the SAM 100
    Elasticities Database 102
    Summary 104
    Key Terms 105
    Practice and Review 105
4 Final Demand in a CGE Model 108
    Final Demand Data in a SAM 109
    Income Data in a SAM 110
    Three-Stage Final Demand 112
    Utility-Maximizing Private Households 113
    Demand Response to Income Changes 117
    Demand Response to Relative Price Changes 118
    Comparing Utility Functions Used in CGE Models 121
    Import Demand 128
    Export Demand 131
    Consumer Welfare 135
    Summary 140
    Key Terms 141
    Practice and Review 142
    Technical Appendix 4.1: Elasticity Parameters in Utility Functions 143
5 Supply in a CGE Model 145
    Production Data in a SAM 146
    Input–Output Coefficients 147
    Producer Behavior in a CGE Model 149
    Technology Tree and Nested Production Functions 150
    Intermediate Input Demand 152
    Factor (Value-Added) Demand 155
    Combining Intermediate Inputs and Factors 159
    Input Prices and Level of Output 159
    Export Supply 163
    Supply with a Non-diagonal Make Matrix 166
    Summary 168
    Key Terms 169
    Practice and Review 169
    Technical Appendix 5.1: Inputs as Substitutes or Complements –
        Energy Nesting in CGE Models of Climate Change Mitigation 171
6 Factors of Production in a CGE Model 174   
    Factors of Production Data in a SAM 175
    Factor Mobility 176
    Factor Endowment Change 179
    Factors as Complements and Substitutes 180
    Factor Productivity Change 183
    Factor Unemployment 187
    Factors and Structural Change 189
    Summary 191
    Key Terms 192
    Practice and Review 192
7 Trade in a CGE Model 194
    Trade Data in a SAM 195
    Exchange Rates 196
    Terms of Trade 200
    Trade Theory in CGE Models 203
    Factor Endowment Changes, Trade, and Terms of Trade 204
    World Price Changes and Factor Income Distribution 209
    Booming Sector, Dutch Disease 210
    Trade Margins in International Trade 214
    Summary 216
    Key Terms 216
    Practice and Review 217
8 Taxes in a CGE Model 219
    Trade Taxes 222
    Production Taxes 230
    Sales Taxes 234
    Factor Use Taxes 238
    Income Taxes 241
    Second-Best Efficiency Effects 247
    Marginal Welfare Burden of a Tax 249
    Preferential Tariffs 253
    Summary 259
    Key Terms 259
    Practice and Review 260
9 Regulations in a CGE Model 262
    Types of Regulations 262
    Nontariff Measures in International Trade 263
    Regulations to Correct Negative Production Externalities 277
    Summary 285
    Key Terms 286
    Practice and Review 286
10 Conclusion: Frontiers in CGE Modeling 287
    Model Exercises 296
        Introduction 296
        Model Exercise 1: Set Up the GTAP Model 300
        Model Exercise 2: Explore the GTAP Model and Database 306
        Model Exercise 3: Skill-building in Using the Model 313
        Model Exercise 4: Climate Shocks and Food Price Spikes 331
        Model Exercise 5: Food Fight: Agricultural Production Subsidies 337
        Model Exercise 6: How Immigration Can Raise Wages 344
        Model Exercise 7: Anatomy of a Trade War 350
        Model Exercise 8: The Marginal Welfare Burden of the US Tax System 361
        Model Exercise 9: Climate Change – the World in 2050 369
        Model Exercise 10: Successful Quitters – “MPOWER” Changing Attitudes toward Tobacco Use 378
        Model Exercise 11: Deep Integration in a Japan–US Preferential Trade Agreement 390
    Practice and Review Answer Key 403
        Chapter 1 403
        Chapter 2 404
        Chapter 3 405
        Chapter 4 405
        Chapter 5 406
        Chapter 6 407
        Chapter 7 408
        Chapter 8 408
        Chapter 9 409
    Model Exercise Answer Key 410
        Model Exercise 2 410
        Model Exercise 3 411
        Model Exercise 4 412
        Model Exercise 5 413
        Model Exercise 6 415
        Model Exercise 7 417
        Model Exercise 8 419
        Model Exercise 9 420
        Model Exercise 10 421
        Model Exercise 11 424
Appendix A: Social Accounting Matrix for the United States, 2007 $US Billions 428
Appendix B: Price and Quantity Variables in a Standard CGE Model 430
Appendix C: Elasticity Parameters in the GTAP Model 437
Appendix D: Taxes in the GTAP Model 438
Glossary 440
References 455
Author Index 468
Subject Index 470

Publisher : Cambridge University Press; 3rd edition (January 7, 2021)
Language : English
Pages : 500
ISBN-10 : 1108748023
ISBN-13 : 978-1108748025