Computational Economics

, Volume 39, Issue 3, pp 219–241 | Cite as

Propagation of Data Error and Parametric Sensitivity in Computable General Equilibrium Models

  • Joshua Elliott
  • Meredith Franklin
  • Ian Foster
  • Todd Munson
  • Margaret Loudermilk


While computable general equilibrium (CGE) models are a well-established tool in economic analyses, it is often difficult to disentangle the effects of policies of interest from that of the assumptions made regarding the underlying calibration data and model parameters. To characterize the behavior of a CGE model of carbon output with respect to two of these assumptions, we perform a large-scale Monte Carlo experiment to examine its sensitivity to base year calibration data and elasticity of substitution parameters in the absence of a policy change. By examining a variety of output variables at different levels of economic and geographic aggregation, we assess how these forms of uncertainty impact the conclusions that can be drawn from the model simulations. We find greater sensitivity to uncertainty in the elasticity of substitution parameters than to uncertainty in the base-year data as the projection period increases. While many model simulations were conducted to generate large output samples, we find that few are required to capture the mean model response of the variables tested. However, characterizing standard errors and empirical probability distribution functions is not possible without a large number of simulations.


Computable General Equilibrium Models Uncertainty Sensitivity 


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Copyright information

© Springer Science+Business Media, LLC. 2011

Authors and Affiliations

  • Joshua Elliott
    • 1
  • Meredith Franklin
    • 2
  • Ian Foster
    • 1
  • Todd Munson
    • 1
  • Margaret Loudermilk
    • 1
  1. 1.Computation InstituteUniversity of Chicago and Argonne National LaboratoryChicagoUSA
  2. 2.University of Chicago and Argonne National LaboratoryChicagoUSA

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