Optimal Policy Design: A CGE Approach
38 Pages Posted: 9 May 2018 Last revised: 13 Jul 2018
Date Written: February 1, 2017
In this paper we extend an existing computable general equilibrium (CGE) model to perform optimal policy design exercises. Specifically, to an otherwise standard CGE model, we add an objective function that allows us to compute optimal values for selected policy variables. In turn, the CGE model operates as the constraint of the optimization problem. In addition, we illustrate the usefulness of the proposed approach to optimal policy design. For this purpose, we develop an exercise with real data from Argentina.
Keywords: Computable General Equilibrium, Optimal Policy Design
JEL Classification: D58, E61
Suggested Citation: Suggested Citation