On linking microsimulation and computable general equilibrium models using exact aggregation of heterogeneous discrete-choice making agents

Riccardo Magnani and Jean Mercenier ()

Economic Modelling, 2009, vol. 26, issue 3, 560-570

Abstract: Our paper contributes by bridging the gap between the (partial equilibrium) microsimulation and the computable general equilibrium (CGE) approaches, by making use of exact aggregation results from the discrete choice literature: heterogeneous individuals choosing within a set of discrete alternatives may be aggregated into a representative agent with (possibly multiple-level) constant elasticity-of-substitution/transformation preferences/technologies. These results therefore provide a natural link between the two policy evaluation approaches. We illustrate the usefulness of these results by evaluating potential effects of population ageing on the dynamics of income distribution and inequalities, using a simple overlapping generations model where individuals make leisure/work decisions, and choose a profession among a discrete set of alternatives.

Keywords: Microsimulation; CGE; models; Exact; aggregation; Discrete; choice; Nested; multinomial; logit; Population; ageing; Income; inequality (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (26)

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Related works:
Working Paper: On linking microsimulation and computable general equilibrium models using exact aggregation of heterogeneous discrete-choice making agents (2009)
Working Paper: On Linking Microsimulation and Computable General Equilibrium Models Using Exact Aggregation of Heterogeneous Discrete-choice Making Agents (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:26:y:2009:i:3:p:560-570

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