A SIMULTANEOUS MULTI-FACTOR PRICE REVISION FOR SOLVING A NUMERICAL GENERAL EQUILIBRIUM MODEL

概要

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A general equilibrium model is a powerful analytical framework with which to examine the magnitude and the charting of the reverberative effects that influence the entire network of sectors in and between economies. It is therefore useful to develop a fast, efficient, and easily implementable algorithm for an empirical analysis. This paper expands a fixed-point algorithm developed by Kimbell and Harrison (1986) in a simultaneous multi-factor context and applies it to a 2-country by 2-sector general equilibrium model based on the Armington assumption (Armington 1969). This simultaneous multi-factor price revision (SMFPR) approach simulates not only the interaction between sectors within a country, but across countries. First, the main strengths of the proposed SMFPR approach are: (1) simplicity in both concept and programming, (2) ease of calculations; no need for Jacobian calculations, (3) increased accuracy, and (4) assured convergence of the equilibrium values with the conditions of uniqueness and stability. A possible weakness is that the number of iterations for the convergence of equilibrium values is relatively increased, compared with the Newton type of algorithms. However, the proposed SMFPR approach reduced the number of iterations by 75 percent over the Scarfs algorithm, which Shoven and Whalley (1974) used to solve the same problem with 1653 iterations.
青森公立大学の論文
2003-03-20