From CGE to ABM and Climate


Studies of the economic impact and mitigation of climate change usually use computable general equilibrium models (CGE). Equilibrium models, as the name suggests, model the economy as in equilibrium, the transitions to the equilibrium are ignored. In the time spend outside equilibrium, the economy produces different quantities of goods and pollution as predicted by the equilibrium model. If the economy in this  time outside of the equilibrium produces a different amount of climate gasses the predictions could be dangerously wrong.

We work on a computational generalization of the Arrow-Debreu general equilibrium model, which is not in equilibrium during the transitions, but converges to the same equilibrium as a CGE model with the same data and assumption. These models can be calibrated using the same techniques and data that are widely used in CGE models. We call this new class of models Computational Complete Economy models.

People: Davoud Taghawi-Nejad

Project Leader / Primary Investigator

Prof J. Doyne Farmer

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