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

Lofgren, Hans; Go, Delfin S.; Mendez Ramos, Fabian; Robinson, Sherman

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

Autores

Editor

World Bank Group, Washington, DC

Descripción

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.

Palabras clave

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