Implicit Additivity as a Strategy for Restricting The Parameter Space in CGE Models
Thomas Hertel (),
Paul Preckel () and
Marinos E. Tsigas
No 270868, 1990 Annual meeting, August 5-8, Vancouver, Canada from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)
The purpose of this paper is to illustrate the value of the Constant Difference Elasticity (CDE) functional form in applied general equilibrium analysis. It is a natural generalization of the commonly used CES form which permits the researcher to calibrate preferences to complete vectors of own-price and income elasticities. Similarly revenue and cost functions may be calibrated to appropriate vectors of compensated own-price elasticities of supply and demand. Because the CDE is an implicit functional form, its incorporation into a CGE model requires some additional steps. These are discussed and a tworegion, three good illustration is provided.
Keywords: Agricultural and Food Policy; Research Methods/ Statistical Methods (search for similar items in EconPapers)
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