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GTAP Resource #2507

"Mending the Family Tree: A Reconciliation of the Linearization and Levels Schools of CGE Modelling"
by Hertel, Thomas, Mark Horridge and Ken Pearson


Abstract
A revised version of this paper was published in
Economic Modelling, Vol. 9 (1992), pp. 385-407 .

Abstract

This paper offers a critical comparison between the North American levels school of applied general equilibrium modelling and the Norwegian/Australian school of linearizers. The paper develops both the levels and linearized representations of a neoclassical, multiregion trade model. This development is used to focus attention on similarities and differences between the two schools. The main conclusions are as follows.
* The method used to solve applied general equilibrium models is not really the issue - the solution method used has become short-hand for a host of cultural differences reflecting the orientation of the two groups.
* Levels or linearized versions of models are equally valid representations. Either representation is a natural starting point for obtaining accurate solutions of the model.
* Linearized versions ofter aid transparency in explaining the mechanisms at work in a model.
* In view of recent developments with the GEMPACK software suite, it is no longer necessary for linearizers to settle for solutions containing linearization errors.
* The two schools have a great deal in common and both would benefit from greater cooperation.


Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Published
By/In: Imct Project, Melbourne University, Preliminary Working Paper No. IP-54
Date: 1995
Version: June 1991
Created: Pearson, K. (8/28/2007)
Updated: Batta, G. (8/29/2007)
Visits: 1,492
- Software
- Calibration and parameter estimation


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  File format GTAP Resource 2507  (1.8 MB)   Replicated: 0 time(s)


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