Optimal Policy Design: A CGE Approach

38 Pages Posted: 9 May 2018 Last revised: 13 Jul 2018

See all articles by Martin Cicowiez

Martin Cicowiez

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS)

Bernard Decaluwe

Université Laval - Département d'Économique

Mustapha K. Nabli

World Bank

Date Written: February 1, 2017

Abstract

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

Cicowiez, Martin and Decaluwe, Bernard and Nabli, Mustapha K., Optimal Policy Design: A CGE Approach (February 1, 2017). Partnership for Economic Policy Working Paper No. 2017-07. Available at SSRN: https://ssrn.com/abstract=3163704 or http://dx.doi.org/10.2139/ssrn.3163704

Martin Cicowiez (Contact Author)

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) ( email )

Calle 6 e/47 y 48
La Plata, Provincia de Buenos Aires 1900
Argentina

Bernard Decaluwe

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada
418-656-5561 (Phone)
418-656-7798 (Fax)

Mustapha K. Nabli

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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