PARAMETER ESTIMATION FOR A COMPUTABLE GENERAL EQUILIBRIUM MODEL: A MAXIMUM ENTROPY APPROACH

We introduce a maximum entropy approach to parameter estimation for computable general equilibrium (CGE) models. The approach applies information theory to estimating a system of nonlinear simultaneous equations. It has a number of advantages. First, it imposes all general equilibrium constraints. Second, it permits incorporation of prior information on parameter values. Third, it can be applied in the absence of copious data. Finally, it supplies measures of the capacity of the model to reproduce the historical record and the statistical significance of parameter estimates. The method is applied to estimating a CGE model of Mozambique.


Issue Date:
2001
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/42456
PURL Identifier:
http://purl.umn.edu/42456
Total Pages:
42
JEL Codes:
C51; C68
Series Statement:
TMD Discussion Paper
40




 Record created 2017-04-01, last modified 2018-01-22

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