Thank you for your participation in the IMPLAN CGE Survey. Please review the following CGE value description below before completing the questions.
Computable general equilibrium (CGE) models are multi-sector models founded in microeconomic principles. More theoretically nuanced than IO models, CGE models examine the behavioral interactions of three primary actors: profit maximizing firms, utility-maximizing consumers, and governments that tax, spend and enact legislation. Using numerical methods, a CGE model solves for prices and wages across industries and different wage groups. As such, CGE models provide consistent results across households, firms and the public sector and are particularly useful when the expected impacts of an external shock are complex and realized through multiple channels.
Whereas IO models are demand driven, CGE models rely on relative price changes to estimate employment effects in different sectors. This allows for behavioral responses not easily accounted for in other models, such as input substitution in response to tax and price changes. CGE models are especially useful in welfare analysis, allowing better understanding of the disparate impacts of policy change and economic shocks (eg, commodity price changes) on low, medium and high income earning households. Common applications of CGE models include tax policy, environmental and resource policy, trade policy and housing market analysis.
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