Identifying key elasticities in a CGE model: a Monte Carlo approach

Antoine Belgodere, Charles Vellutini
Applied Economics Letters, 2011, 1–4, iFirst

This article presents a simple Monte Carlo (MC) procedure to improve sensitivity analysis in computable general equilibrium (CGE) modelling. MC experiments provide the modeller with a population of randomly drawn exogenous parameters and corresponding endogenous outcomes. Standard econometrics can then shed light on the relationship between them and help to identify key parameters, particularly key elasticities.