An algorithm for sequential solutions of dynamic CGE models with perfect foresight over an infinite numbers of periods

T. Nicolaus Tideman and Florenz Plassmann

Working Papers from Virginia Polytechnic Institute and State University, Department of Economics

Abstract: We describe a simple algorithm that permits the sequential (period-by-period) solution of large-scale dynamic CGE models with agents who have perfect foresight over an infinite number of periods. The algorithm requires neither any assumptions about behavior in a ?final? period nor that the base case economy be currently in steady state. We briefly illustrate the algorithm with an analysis of substituting a flat tax for all income taxes in the United States.

Keywords: Computable General Equilibrium; Perfect Foresight; Rational Expectations (search for similar items in EconPapers)
Date: 2006
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ftp://repec.econ.vt.edu/Papers/Tideman/CGEAlgorithm.pdf First version, 2006 (application/pdf)

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Persistent link: http://EconPapers.repec.org/RePEc:vpi:wpaper:e07-6

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