This is closely related to multiple agent characteristic but is important enough to merit a separate item. A hallmark of CGE models is that production is split up into at least two sectors.
Advantage
Improves the model's level of detail and allows it to do a better job of reproducing important features of the economy.
Disadvantage
The complexity of a computational model increases sharply when the number of goods increases to two or more. It becomes necessary to compute relative prices for all of the goods and to use appropriate price indexes when computing aggregate variables. In addition, it is usually necessary to account for the use of intermediate goods in production.
Site Index |
Zoom |
Admin
URL: https://wilcoxen.maxwell.insightworks.com/pages/392.html
Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 11/29/2003
