Validating Policy-Induced Economic Change Using Sequential General Equilibrium SAMs

M. Alejandro Cardenete, M. Carmen Lima, Ferran Sancho

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1 Citation (Scopus)

Abstract

Copyright © 2016 John Wiley & Sons, Ltd. We present a novel sequential approach that explores the capacity of Computable general equilibrium (CGE) models to track down policy-induced economic changes and their ability to generate contrastable data. We use an empirical Social accounting matrix (SAM) of the region of Andalusia, in the south of Spain, to construct an initial CGE model. This model is then perturbed with a set of policy shocks related to EU Structural Funds invested into Andalusia. These shocks are accompanied by some parameter adjustments that pick up the main external changes not explained by the model. We generate a sequence of model-produced virtual SAMs. We then compare the last virtual SAM in the sequence with a new available empirical SAM. This allows us to check relatedness, for the same year, between the model produced and the empirical SAMs. The results show a good fit to the empirical data, providing further support to the CGE modelling tool. Copyright © 2016 John Wiley & Sons, Ltd.
Original languageEnglish
Pages (from-to)291-304
JournalJournal of Forecasting
Volume36
DOIs
Publication statusPublished - 1 Apr 2017

Keywords

  • European regional policy
  • Social accounting matrices
  • applied general equilibrium
  • impact analysis

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