NDLI: Propagation of Data Error and Parametric Sensitivity in Computable General Equilibrium Models

Content Provider	Springer Nature Link
Author	Elliott, Joshua Franklin, Meredith Foster, Ian Munson, Todd Loudermilk, Margaret
Copyright Year	2011
Abstract	While computable general equilibrium (CGE) models are a well-established tool in economic analyses, it is often difficult to disentangle the effects of policies of interest from that of the assumptions made regarding the underlying calibration data and model parameters. To characterize the behavior of a CGE model of carbon output with respect to two of these assumptions, we perform a large-scale Monte Carlo experiment to examine its sensitivity to base year calibration data and elasticity of substitution parameters in the absence of a policy change. By examining a variety of output variables at different levels of economic and geographic aggregation, we assess how these forms of uncertainty impact the conclusions that can be drawn from the model simulations. We find greater sensitivity to uncertainty in the elasticity of substitution parameters than to uncertainty in the base-year data as the projection period increases. While many model simulations were conducted to generate large output samples, we find that few are required to capture the mean model response of the variables tested. However, characterizing standard errors and empirical probability distribution functions is not possible without a large number of simulations.
Starting Page	219
Ending Page	241
Page Count	23
File Format	PDF
ISSN	09277099
Journal	Computational Economics
Volume Number	39
Issue Number	3
e-ISSN	15729974
Language	English
Publisher	Springer US
Publisher Date	2011-01-05
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Computable General Equilibrium Models Uncertainty Sensitivity Economic Theory
Content Type	Text
Resource Type	Article
Subject	Economics, Econometrics and Finance Computer Science Applications

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4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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