Specifying Parameters in Computable General Equilibrium Models using Optimal Fingerprint Detection Methods
The specification of parameters is a crucial task in the development of economic models. The objective of this paper is to improve the standard parameter specification of computable general equilibrium (CGE) models. On that account, we illustrate how Optimal Fingerprint Detection Methods (OFDM) can...
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| Format: | Technical Report |
| Language: | en_US |
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MIT Joint Program on the Science and Policy of Global Change
2015
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| Online Access: | http://hdl.handle.net/1721.1/95761 |
| _version_ | 1826197175809343488 |
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| author | Koesler, S. |
| author_facet | Koesler, S. |
| author_sort | Koesler, S. |
| collection | MIT |
| description | The specification of parameters is a crucial task in the development of economic models. The objective of this paper is to improve the standard parameter specification of computable general equilibrium (CGE) models. On that account, we illustrate how Optimal Fingerprint Detection Methods (OFDM) can be used to identify appropriate values for various parameters. These methods originate from climate science and combine a simple model validation exercise with a structured sensitivity analysis. The new approach has three main benefits: 1) It uses a structured optimisation procedure and does not revert to ad-hoc model improvements. 2) It accounts for uncertainty in parameter estimates by using information on the distribution of parameter estimates from the literature. 3) It can be applied for the specification of a range of parameters required in CGE models; for example, for the definition of elasticities or productivity growth rates. |
| first_indexed | 2024-09-23T10:43:39Z |
| format | Technical Report |
| id | mit-1721.1/95761 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T10:43:39Z |
| publishDate | 2015 |
| publisher | MIT Joint Program on the Science and Policy of Global Change |
| record_format | dspace |
| spelling | mit-1721.1/957612019-04-10T22:47:26Z Specifying Parameters in Computable General Equilibrium Models using Optimal Fingerprint Detection Methods Koesler, S. The specification of parameters is a crucial task in the development of economic models. The objective of this paper is to improve the standard parameter specification of computable general equilibrium (CGE) models. On that account, we illustrate how Optimal Fingerprint Detection Methods (OFDM) can be used to identify appropriate values for various parameters. These methods originate from climate science and combine a simple model validation exercise with a structured sensitivity analysis. The new approach has three main benefits: 1) It uses a structured optimisation procedure and does not revert to ad-hoc model improvements. 2) It accounts for uncertainty in parameter estimates by using information on the distribution of parameter estimates from the literature. 3) It can be applied for the specification of a range of parameters required in CGE models; for example, for the definition of elasticities or productivity growth rates. This work has been made possible by the generous financial support of the Fritz Thyssen Foundation. 2015-03-03T19:25:55Z 2015-03-03T19:25:55Z 2015-02 Technical Report http://hdl.handle.net/1721.1/95761 Report 276 en_US MIT Joint Program Report Series;276 application/pdf MIT Joint Program on the Science and Policy of Global Change |
| spellingShingle | Koesler, S. Specifying Parameters in Computable General Equilibrium Models using Optimal Fingerprint Detection Methods |
| title | Specifying Parameters in Computable General Equilibrium Models using Optimal Fingerprint Detection Methods |
| title_full | Specifying Parameters in Computable General Equilibrium Models using Optimal Fingerprint Detection Methods |
| title_fullStr | Specifying Parameters in Computable General Equilibrium Models using Optimal Fingerprint Detection Methods |
| title_full_unstemmed | Specifying Parameters in Computable General Equilibrium Models using Optimal Fingerprint Detection Methods |
| title_short | Specifying Parameters in Computable General Equilibrium Models using Optimal Fingerprint Detection Methods |
| title_sort | specifying parameters in computable general equilibrium models using optimal fingerprint detection methods |
| url | http://hdl.handle.net/1721.1/95761 |
| work_keys_str_mv | AT koeslers specifyingparametersincomputablegeneralequilibriummodelsusingoptimalfingerprintdetectionmethods |