Computable General Equilibrium
A computable general equilibrium (CGE) model is a numerical simulation of an entire economy in which optimizing producers and consumers interact through markets that all clear simultaneously. Building on Walras's general-equilibrium theory and a benchmark social accounting matrix, a CGE model is calibrated to reproduce a base-year economy and then solved for the new vector of prices and quantities that would prevail under a counterfactual policy — a tax reform, a tariff change, a carbon price — capturing how the shock reverberates and re-equilibrates across every market.
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Sources
- Shoven, J. B., & Whalley, J. (1992). Applying General Equilibrium. Cambridge Surveys of Economic Literature. Cambridge University Press. ISBN: 9780521319867
- Shoven, J. B., & Whalley, J. (1984). Applied general-equilibrium models of taxation and international trade: An introduction and survey. Journal of Economic Literature, 22(3), 1007–1051. link ↗
How to cite this page
ScholarGate. (2026, June 22). Computable General Equilibrium (CGE) Modeling. ScholarGate. https://scholargate.app/en/economics/computable-general-equilibrium
Which method?
Set this method beside its closest kin and read them side by side — the library lays the books on the table; the choice is yours.
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- Input-Output AnalysisEconomics↔ compare
- Social Accounting MatrixEconomics↔ compare