Public Policy Evaluation and Applied General Equilibrium

There are many technical papers about construction, calibration and solution of applied general equilibrium models, but few about methodology and concepts used to arrive at the construction of these. This paper aim is discussion in the conceptual area of these models, rather than in the technical part. In this way, here shows key conceptual elements to take in account before building this kind of models. As it can be seen throughout this paper, this kind of models have a solid conceptual base that allows the construction of different economic shocks or economic policy alternatives, which serve for the analysis and evaluation of public policies. Moreover, this way of building policy scenarios is not only applied in this type of model, but in other alternatives of public policy analysis. Lastly, given the micro-foundation of these models, the way in which shocks are spread throughout the economy can be analyzed, however, this depends on the parameters that are settled in the functional forms of the model