Interpretation of Simulation Results

Nobuhiro Hosoe, Kenji Gasawa and Hideo Hashimoto

Chapter 9 in Textbook of Computable General Equilibrium Modelling, 2010, pp 144-157 from Palgrave Macmillan

Abstract: Abstract We have explained how to develop a CGE model, prepare simulation scenarios and run a simulation to analyse the impact of policy or other exogenous shocks on an economy. The simulation results in the output files show changes of various economic variables, such as sectoral output, consumption, prices and welfare, induced by such shocks. However, a mere listing of these changes does not constitute an ‘analysis’. Interpretation of the simulation results, although usually the final step, is the most important task in CGE analysis. A discussion of the simulation results can only be made persuasive by explaining them using intuitive reasoning. To do so, we have to understand how the model structure combined with the simulation scenarios leads to the numerical solutions.

Keywords: Indifference Curve; Import Price; Export Price; Current Account Deficit; Fourth Quadrant (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28165-3_9

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DOI: 10.1057/9780230281653_9

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