Dynamic Multi-Sector CGE Modeling -- Reply to Assmann and Hogrefe

Wendner, Ronald and Farmer, Karl (2008): Dynamic Multi-Sector CGE Modeling -- Reply to Assmann and Hogrefe.

Abstract

Farmer and Wendner (2004) consider the sensitivity of policy effects, as implied by dynamic multi-sector computable general equilibrium models, with respect to the specification of capital and investment aggregation. They demonstrate that (small) differences in the specification of capital and investment aggregation may yield large differences in the policy effects predicted by dynamic multi-sector computable general equilibrium models. Assmann and Hogrefe, AH in the following, conclude that Farmer and Wendner's (FW) result indeed also holds in different model frameworks. However, they criticize FW's model that is based on the ``puzzling'' value capital approach. Here, FW reply to AH's critique.

• Item Type: MPRA Paper
• Language: English
• Keywords: heterogeneous capital, multi-sector CGE, investment aggregation, overlapping generations
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D9 - Intertemporal Choice > D91 - Intertemporal Household Choice ; Life Cycle Models and Saving; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D58 - Computable and Other Applied General Equilibrium Models

References

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Farmer K., Wendner, R., 2004. Dynamic, Multi-Sector CGE Modeling and the Specification of Capital. Structural Change and Economic Dynamics 15(4), 469 -- 492.