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Estimating Parameters and Structural Change in CGE Models Using a Bayesian Cross-Entropy Estimation Approach

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World Bank (WB)

Abstract: This paper uses a three-step Bayesian cross-entropy estimation approach in an environment of noisy and scarce data to estimate behavioral parameters for a computable general equilibrium model. The estimation also measures how labor-augmenting productivity and other structural parameters in the model may have shifted over time to contribute to the generation of historically observed changes in the economic arrangement. In this approach, the parameters in a computable general equilibrium model are treated as fixed but unobserved, represented as prior mean values with prior error mass functions. Estimation of the parameters involves using an information-theoretic Bayesian approach to exploit additional information in the form of new data from a series of social accounting matrices, which are assumed were measured with error. The estimation procedure is "efficient" in the sense that it uses all available information and makes no assumptions about unavailable information. As illustration, the methodology is applied to estimate the parameters of a computable general equilibrium model using alternative data sets for the Republic of Korea and Sub-Saharan Africa.
Type: Publications & Research
Publications & Research :: Policy Research Working Paper
Link: http://hdl.handle.net/10986/21391
Subject: ADVANCED COUNTRIES
AGRICULTURE
ARRANGEMENT
BASE YEAR
CAPITAL-LABOR RATIO
COAUTHORS
COMMODITIES
COMPETITIVENESS
CONSTANT ELASTICITY
CONSTANT PRICES
CONSTANT RETURNS
CONSTANT RETURNS TO SCALE
CURRENCY
DATA ELEMENTS
DATA SET
DATA SETS
DESCRIPTION
DEVELOPED COUNTRIES
DEVELOPING COUNTRIES
DEVELOPING COUNTRY
DEVELOPMENT ECONOMICS
DEVELOPMENT POLICY
DISTRIBUTION PARAMETER
DOMAIN
DYNAMIC BEHAVIOR
ECONOMETRICS
ECONOMIC EFFICIENCY
ECONOMIC POLICY
ECONOMIC REVIEW
ECONOMIC STRUCTURE
ECONOMIC STRUCTURES
ECONOMIC SYSTEMS
ECONOMIC THEORY
ECONOMIC TRANSFORMATION
ELASTICITY
ELASTICITY OF SUBSTITUTION
EMPIRICAL ESTIMATION
ENDOGENOUS VARIABLES
EQUATIONS
EQUILIBRIUM
EQUILIBRIUM DYNAMICS
EQUILIBRIUM THEORY
EXOGENOUS VARIABLES
EXPECTED VALUE
EXPECTED VALUES
EXPORTS
EXTERNAL SHOCKS
FACTOR COMPONENTS
FEDERAL RESERVE
FEDERAL RESERVE BANK
FOREIGN TRADE
FUNCTIONAL FORM
FUTURE RESEARCH
GDP
GDP DEFLATOR
GENERAL EQUILIBRIUM MODEL
GLOBALIZATION
GROWTH EPISODES
GROWTH RATE
GROWTH RATES
HISTORICAL DATA
INCOMES
INDEXES
INDICES
INDUSTRIALIZATION
INEQUALITY
INFORMATION PROCESSING
INFORMATION TECHNOLOGY
INNOVATION
MACROECONOMIC ANALYSIS
MACROECONOMICS
MANUFACTURING
MANUSCRIPT
MEAN VALUE
MEASUREMENT ERROR
MODEL ESTIMATION
NATIONAL INCOME
NATIONAL OUTPUT
NORMAL DISTRIBUTION
NOTATION
NOTATIONS
OBSERVED CHANGES
OPEN ACCESS
OPEN ECONOMY
OPTIMIZATION
OUTPUTS
POLICY DISCUSSIONS
POLICY FORMULATION
POLICY RESEARCH
PRICE CHANGES
PRICE SERIES
PROBABILITIES
PROBABILITY
PRODUCT DIFFERENTIATION
PRODUCTION FUNCTIONS
PRODUCTION STRUCTURE
PRODUCTIVITY
PRODUCTIVITY GROWTH
PROTOTYPE
REGIONAL ACCOUNTS
REGIONAL LEVEL
RELATIVE PRICES
RELIABILITY
RESULT
RESULTS
SAVINGS
SERIES DATA
SMALL ECONOMIES
STATISTICAL ANALYSIS
STRUCTURAL CHANGE
TARGETS
TAX
TAX RATES
TECHNOLOGICAL CHANGE
TOTAL FACTOR PRODUCTIVITY
TRADE STRUCTURE
TRANSACTION
USES
VALUE ADDED
VALUE ADDED SERVICES
WEB
WORLD DEVELOPMENT INDICATORS




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