On the Solution of a Computable General Equilibrium Model

Sivak, J., Tihanyi, A., & Zalai, E. (1984). On the Solution of a Computable General Equilibrium Model. IIASA Collaborative Paper. IIASA, Laxenburg, Austria: CP-84-023

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Abstract

Many of today's most significant socioeconomic problems, such as slower economic growth, the decline of some established industries, and shifts in patterns of foreign trade, are international or transnational in nature. But these problems manifest themselves in a variety of ways; both the intensities and the perceptions of the problems differ from one country to another, so that intercountry comparative analyses of recent historical developments are necessary. Through these analyses we attempt to identify the underlying processes of economic structural change and formulate useful hypotheses concerning future developments. The understanding of these processes and future prospects provides the focus for IIASA's project on Comparative Analysis of Economic Structure and Growth.

Our research concentrates primarily on the empirical analysis of interregional and intertemporal economic structural change, on the sources of and constraints on economic growth, on problems of adaptation to sudden changes, and especially on problems arising from changing patterns of international trade, resource availability, and technology. The project relies on IIASA's accumulated expertise in related fields and, in particular, on the data bases and systems of models that have been developed in the recent past.

This paper is concerned with the solution algorithm of a nonlinear multisectoral model. The model has been developed at IIASA and falls into the class of so called computable general equilibrium models. The economic theoretical properties of the model, as well as some results of simulations based on it, have been reported elsewhere.

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