Applied General Equilibrium : An Introduction

Description

This advanced textbook provides a straightforward but comprehensive introduction to applied general equilibrium modeling. General equilibrium is the backbone of modern economic analysis, which is why generation after generation of economics students have been introduced to it. As an analytical tool, general equilibrium can provide one of the most complete views of a given economy, as it incorporates all economic agents (households, firms, government and the foreign sector) in an integrated way that explicitly reveals the interplay of economic forces -- supply and demand -- and the balancing role of prices. Applied general equilibrium goes one step further in modeling, since it entails the integration of microeconomic theory, data handling and computing. This integration is essential for successful empirical modeling, but also involves various abilities that are not found in standard books. This book fills the gap, providing advanced students with the required tools, from the construction of consistent and applicable general equilibrium models to the interpretation of the results that ensue from the adoption of policies. This second edition expands the range of topics covered, including: indispensable general equilibrium theory, step-by-step model design, incremental model extensions, a wealth of sample computer code, procedures for constructing economic databases, database adjustments and database updating algorithms, numerical model calibration, policy strategies and their trade-offs and welfare effects, and a discussion of empirical policy examples. Read more... Abstract: This advanced textbook provides a straightforward but comprehensive introduction to applied general equilibrium modeling. General equilibrium is the backbone of modern economic analysis, which is why generation after generation of economics students have been introduced to it. As an analytical tool, general equilibrium can provide one of the most complete views of a given economy, as it incorporates all economic agents (households, firms, government and the foreign sector) in an integrated way that explicitly reveals the interplay of economic forces -- supply and demand -- and the balancing role of prices. Applied general equilibrium goes one step further in modeling, since it entails the integration of microeconomic theory, data handling and computing. This integration is essential for successful empirical modeling, but also involves various abilities that are not found in standard books. This book fills the gap, providing advanced students with the required tools, from the construction of consistent and applicable general equilibrium models to the interpretation of the results that ensue from the adoption of policies. This second edition expands the range of topics covered, including: indispensable general equilibrium theory, step-by-step model design, incremental model extensions, a wealth of sample computer code, procedures for constructing economic databases, database adjustments and database updating algorithms, numerical model calibration, policy strategies and their trade-offs and welfare effects, and a discussion of empirical policy examples Front Matter ....Pages i-xvi Introduction (Manuel Alejandro Cardenete, Ana-Isabel Guerra, Ferran Sancho)....Pages 1-3 An Overview of General Equilibrium Theory (Manuel Alejandro Cardenete, Ana-Isabel Guerra, Ferran Sancho)....Pages 5-33 A Simple General Equilibrium Model (Manuel Alejandro Cardenete, Ana-Isabel Guerra, Ferran Sancho)....Pages 35-54 A General Equilibrium Model with a Government Sector (Manuel Alejandro Cardenete, Ana-Isabel Guerra, Ferran Sancho)....Pages 55-83 Additions to the Model: External Sector, Labor Market, Consumption Technology and Welfare Evaluation (Manuel Alejandro Cardenete, Ana-Isabel Guerra, Ferran Sancho)....Pages 85-108 Data Base and Model Calibration (Manuel Alejandro Cardenete, Ana-Isabel Guerra, Ferran Sancho)....Pages 109-144 Real-World Examples of Applied General Equilibrium Analysis (Manuel Alejandro Cardenete, Ana-Isabel Guerra, Ferran Sancho)....Pages 145-165 Back Matter ....Pages 167-176