An Evaluation of the Performance of an Applied General Equilibrium Model of the Spanish Economy

Timothy Kehoe, Clemente Polo and Ferran Sancho

Economic Theory, 1995, vol. 6, issue 1, 115-41

Abstract: In 1985-86 the authors were members of a team that constructed a static applied general equilibrium model that was used to analyze the impact on the Spanish economy of the 1986 fiscal reform, which accompanied Spain's entry into the European Community. This paper compares the results obtained to recently published data for 1985-87; we find that the model performed well in predicting the changes in relative prices and resource allocation that actually occurred, particularly if we incorporate exogenous shocks that affected the Spanish economy in 1986. We also analyze the sensitivity of the results to alternative specifications of the labor market and macroeconomic closure rules; we find that the central results are robust.

Date: 1995
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Working Paper: An evaluation of the performance of an applied general equilibrium model of the Spanish economy (1994)
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