Computable General Equilibrium Modeling for Regional Factor Demand: Policy Impacts and Factor Mobility in Economic Development

Abstract

The choice among various politically feasible policies requires the analysis of each policy's general economic and social impacts and analyzing how different these impacts are on other system components. The Regional Computable General Equilibrium model is the most appropriate tool to analyze the effects of alternative policies for rural development on the socioeconomic structure of a social accounting matrix for a multimarket model. Assumption enables a small number of parameters the model requires and a calibration procedure to replicate a base year. One of the shortcomings of this assumption is that the CGE results are only good for relative comparison of alternative policies but not for forecasting. Third, such resources as labor and capital are mobile from sector to sector and region.