Department of Economics. University of Melbourne. Parkville Victoria 3052 Australia
ABSTRACT
A dynamic computable general equilibrium (CGE) model is constructed
for the current Chinese economy. The model incorporates key dynamic features
into the framework of a comparative static CGE model. The model is capable
of tracking, at micro-level, the sectoral responses of various endogenous
variables to a wide range of policy changes and external shocks over medium
or longer period. In addition to the conventional features of CGE models,
the crucial dynamic part of the model is its specification of investment
and capital accumulation. The strength of t he model is that it produces
forecasts which can be interpreted fully in terms of the models theory,
data and the assumptions underlying the exogenous inputs.
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