Macroeconomic modeling based on social-accounting principles

Abstract Using the example of a small comparative static model of Thailand for 1980, this article sets out an approach to macroeconomic model building that is based on two versions of a social-accounting matrix (SAM)—one version contains data for a base year, whereas the cell entries of the other are algebraic expressions for the determination of the corresponding transaction values. Thus the model is developed in transaction-value (TV) form, and this is one distinguishing feature of the approach. Other features derive from different aspects of the relationship between the two SAMs. We argue that the approach has distinct advantages for model description, calibration, and solution and that these are important if models are to be used for policy purposes that place a premium on intelligibility and replicability within the context of a flexible modeling capability.