Empirical Models of General Economic Equilibrium

Abstract

The article considers possibilities and limitations of empirical models of general economic equilibrium and gives their classification. The author divides computable models of general economic equilibrium into two groups: the first one is based on a model of equilibrium prices (G. Scarf’s approach) and the second one - on a multisectorial model of economic growth (L. Johansen’s approach). The researcher also divides models of dynamic stochastic general equilibrium into two groups: the first one is based on a model of the real business cycle (F. Kydland and E. Prescott’s approach) and the second one - on a model of different behavior of firms under monopolistic competition (J. Rotemberg and M. Woodford’s approach). Within each group the study demarcates empirical models with the help of following criteria: an economy’s scale and its openness; application to current and future assessments; analyzed socio-economic phenomenon

Keywords

• classification
• general economic equilibrium
• applied model of general equilibrium
• computable model of general equilibrium
• model of dynamic stochastic general equilibrium
• Bayesian approach
• external shock