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Validating a Detailed, Dynamic CGE Model of the USA

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  • PETER B. DIXON
  • MAUREEN T. RIMMER

Abstract

Computable general equilibrium (CGE) models can be used to generate detailed forecasts of output growth for commodities/industries and thereby provide baselines from which to calculate the effects of policy changes. In this article, we assess a CGE forecasting method that has been applied in policy analyses in the USA and Australia. Using data available up to 1998, we apply the method with the USAGE model to generate ‘genuine forecasts’ for 500 US commodities/industries for the period 1998–2005. We then compare these forecasts with actual outcomes and with alternate forecasts derived as extrapolated trends from 1992 to 1998.

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  • Peter B. Dixon & Maureen T. Rimmer, 2010. "Validating a Detailed, Dynamic CGE Model of the USA," The Economic Record, The Economic Society of Australia, vol. 86(s1), pages 22-34, September.
    • Handle: RePEc:bla:ecorec:v:86:y:2010:i:s1:p:22-34
    DOI: 10.1111/j.1475-4932.2010.00656.x
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    1. W. Jill Harrison & J. Mark Horridge & K.R. Pearson, 2000. "Decomposing Simulation Results with Respect to Exogenous Shocks," Computational Economics, Springer;Society for Computational Economics, vol. 15(3), pages 227-249, June.
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    3. Peter B. Dixon & Maureen T. Rimmer, 1999. "Changes in Indirect Taxes in Australia: A Dynamic General Equilibrium Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(4), pages 327-348, December.
    4. Peter B. Dixon & Jayant Menon & Maureen T. Rimmer, 2000. "Changes in Technology and Preferences: A General Equilibrium Explanation of Rapid Growth in Trade," Australian Economic Papers, Wiley Blackwell, vol. 39(1), pages 33-55, March.
    5. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-177, March.
    6. B. Dixon, Peter, 2008. "Trade Policy in Australia and the Development of Computable General Equilibrium Modeling," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 605-630.
    7. Kehoe,Timothy J. & Srinivasan,T. N. & Whalley,John (ed.), 2005. "Frontiers in Applied General Equilibrium Modeling," Cambridge Books, Cambridge University Press, number 9780521825252, November.
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    Cited by:

    1. Zhao, Xin & Calvin, Katherine V. & Wise, Marshall A. & Iyer, Gokul, 2021. "The role of global agricultural market integration in multiregional economic modeling: Using hindcast experiments to validate an Armington model," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 1-17.
    2. Dixon, Peter B. & Rimmer, Maureen T., 2013. "Validation in Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1271-1330, Elsevier.
    3. Hong, Chanyoung & Yang, Heewon & Hwang, Wonsik & Lee, Jeong-Dong, 2014. "Validation of an R&D-based computable general equilibrium model," Economic Modelling, Elsevier, vol. 42(C), pages 454-463.
    4. James A. Giesecke & John R. Madden, 2013. "Evidence-based regional economic policy analysis: the role of CGE modelling," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(2), pages 285-301.
    5. Dixon, Peter B. & Rimmer, Maureen T. & Waschik, Robert G., 2018. "Evaluating the effects of local content measures in a CGE model: Eliminating the US Buy America(n) programs," Economic Modelling, Elsevier, vol. 68(C), pages 155-166.
    6. Robert M´barek & Ivelin Iliev Rizov, 2013. "European Coexistence Bureau. Best Practice Documents for coexistence of genetically modified crops with conventional and organic farming. 3. Coexistence of genetically modified maize and honey product," JRC Research Reports JRC84850, Joint Research Centre.
    7. Liu, Xianglong Locky & Nassios, Jason & Giesecke, James, 2024. "To tax or to spend? Modelling tax policy responses to oil price shocks," Energy Policy, Elsevier, vol. 185(C).
    8. Liu, Yu & Lu, Yingying, 2015. "The Economic impact of different carbon tax revenue recycling schemes in China: A model-based scenario analysis," Applied Energy, Elsevier, vol. 141(C), pages 96-105.

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