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

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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

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.

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Item type	Article
URI	https://vuir.vu.edu.au/id/eprint/24591
DOI	10.1016/j.econmod.2005.06.007
Official URL	http://www.sciencedirect.com/science/article/pii/S...
Subjects	Historical > FOR Classification > 1403 Econometrics Historical > Faculty/School/Research Centre/Department > College of Business Current > Division/Research > Centre of Policy Studies (CoPS)
Keywords	rational-expectations algorithm, dynamic general equilibrium, tariffs, investment modelling, computable general equilibrium models
Citations in Scopus	20 - View on Scopus
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