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General Equilibrium Modeling for Economic Policy Analysis

Author

Listed:
  • Truong Hong Trinh

    (Department of Finance, University of Economics - The University of Danang, Vietnam)

Abstract

This paper explores the value concept that is important in determining the relationship between demand and supply, and resource allocation in the economy. From value creation perspective, the value concept is redefined to explain value creation and value distribution in the economy. Based on this value concept, the value added method is used for gross domestic product (GDP) measurement that is also used as the objective function in the general equilibrium model. The starting point in general equilibrium modeling is the understanding on the structure and the flows of the economy, in which the general equilibrium mechanism relies on market equilibriums and macro balances. The simulation experiment is used to conduct economic policies from the changes in target sector structure and the combinations of macro closures in the hypothetical economy. The paper contributes a conceptual framework in general equilibrium modeling for economic policy analysis as a good start to understand the more complex general equilibrium models.

Suggested Citation

  • Truong Hong Trinh, 2019. "General Equilibrium Modeling for Economic Policy Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 25-36.
    • Handle: RePEc:eco:journ1:2019-04-4
    as

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    References listed on IDEAS

    as
    1. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    2. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    3. Joanne Evans & Lester C. Hunt (ed.), 2009. "International Handbook on the Economics of Energy," Books, Edward Elgar Publishing, number 12764.
    4. Nobuhiro Hosoe & Kenji Gasawa & Hideo Hashimoto, 2010. "Textbook of Computable General Equilibrium Modelling," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28165-3, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    value concept; market equilibrium; general equilibrium; policy analysis; economic growth;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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