Generally speaking, with CGE models, policy analysis is mostly carried on as â€œshock analysisâ€. That is, changing the values of selected policy variables and computing the corresponding model results. However, todayâ€™s computer and software developments allow us to perform optimal policy exercises, even for relatively large models. That is, for the specification of an objective function and the computation of the corresponding optimal values for selected policy variables, and where the CGE model operates as the constraint of the optimization exercise. In this research project, we to solve general problem where the function to be optimized is a loss function that can incorporate various objectives. In fact, we allow the use of different policy instruments, not only tax rates as in the related literature.
Project leader: Bernard Decaluwe
No journal publications.
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No policy briefs.
No final reports.
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