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The Specification of Price and Income Elasticities in Computable General Equilibrium Models: An Application of Latent Separability

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  • Gohin, Alexandre

Abstract

This paper contributes to the ongoing debate about the specifications of price and income effects in CGE models. We detail in this paper a procedure which allows to implement in such models any regular configuration of price and income effects. This procedure exploits the advantages of latent separability. By allowing some overlapping in the grouping of commodities, this separability concept offers much more flexibility than other separability structures since substitution between goods runs through many channels. This paper also provides an empirical illustration which demonstrates the applicability of our procedure and which highlights, once again, the substantial bearing of these specifications on CGE results.

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  • Gohin, Alexandre, 2003. "The Specification of Price and Income Elasticities in Computable General Equilibrium Models: An Application of Latent Separability," Conference papers 331096, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331096
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