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Comparing the Economic Impact of an Export Shock in Two Modeling Frameworks
Author(s) -
Cassey Andrew J.,
Holland David W.,
Razack Abdul
Publication year - 2011
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1093/aepp/ppr033
Subject(s) - computable general equilibrium , economics , shock (circulatory) , econometrics , capital (architecture) , short run , economic impact analysis , macroeconomics , microeconomics , medicine , archaeology , history
Because of more restrictive assumptions on regional input‐output (IO) models compared to computable general equilibrium (CGE) models, IO results are thought to be consistent with long‐run equilibrium but otherwise overestimated. We compare IO and CGE models' response to a shock to Washington crop exports under various labor market and capital closures. Contrary to conventional wisdom, we find that the positive secondary impacts are larger in the CGE models than in the IO model. Also contrary to conventional wisdom, we find that the closest match between direct effects is when the CGE model has short run, rather than long run restrictions.