Computable General Equilibrium Models for Development Policy Analysis in LDCs

The use of CGE models has gained much popularity among policy analysts in LDCs and there is a fast growing body of literature on this area of economics. In this survey, the advantages of general equilibrium approach over partial equilibrium approach in analyzing a wide range of policy issues are highlighted. The evolution of CGE modeling is discussed and more than 60 CGE applications related to different policy issues in LDCs are surveyed. This comprehensive survey shows that the CGE models have become quite popular analytical tools among policy analysts in LDCs over the last decade or so. The debate in the economic profession regarding the value and appropriateness of using CGE models for policy analysis is examined in the final section of this paper. Some of the criticisms leveled at CGE models are discussed and it is argued that despite this criticism such models are capable of providing insight into important policy problems. Copyright 1991 by Blackwell Publishers Ltd

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