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Rational expectations for large CGE models: A practical algorithm and a policy application

Dixon, Peter, Pearson, Ken, Picton, Mark and Rimmer, Maureen T (2005) Rational expectations for large CGE models: A practical algorithm and a policy application. Economic Modelling, 22 (6). pp. 1001-1019. ISSN 0264-9993

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Abstract

We describe a simple iterative method for solving large dynamic CGE models under rational expectations. Details are given for Australia's MONASH model but the approach applies to a wide range of CGE models. The method is automated in the RunMONASH Windows software, putting CGE modelling under rational expectations within the reach of non-specialist modellers. We provide an illustrative application in which MONASH results under rational expectations are compared with results under static expectations. The application and supporting software can be downloaded. Results from the application are interpreted in terms of elementary economic mechanisms.

Item Type: Article
Uncontrolled Keywords: rational-expectations algorithm, dynamic general equilibrium, tariffs, investment modelling, computable general equilibrium models
Subjects: FOR Classification > 1403 Econometrics
Faculty/School/Research Centre/Department > College of Business
Faculty/School/Research Centre/Department > Centre of Policy Studies (CoPS)
Depositing User: Ms Julie Gardner
Date Deposited: 30 Apr 2014 06:23
Last Modified: 04 Oct 2015 23:54
URI: http://vuir.vu.edu.au/id/eprint/24591
DOI: https://doi.org/10.1016/j.econmod.2005.06.007
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Citations in Scopus: 16 - View on Scopus

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