Framework and Application of Computable General Equilibrium (CGE) Model November 2014 Wannaphong Durongkaveroj Economic Researcher Fiscal Policy Research Institute, Bangkok, Thailand According to the most well-known and complex model in economics for the last 30 years, Computable General Equilibrium (CGE) model is a tool aimed to solve an economic problem based on perfectly competitive market. However, the way to understand this model is not simple as the middle name, general, because it requires leaner to have an upper-intermediate knowledge of economics - at least Master's degree student. Why is it so difficult? The reason is rationally simple. As assumed to be equilibrium, direct, indirect and induced effects take place in the market simultaneously. Commodity's price is a pure incentive of agents namely consumer, producer, government, and foreign buyer. Another aspect of the basic model is to be static which means that market takes time ...
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