This paper advocates
computable general equilibrium (CGE) models as an analytical framework that is
suitable for assessing the impacts of policy interference on the three dimensions
of Sustainable Development, i.e. environmental quality, economic performance and
equity. Methodological extensions of standard CGE models are illustrated that
may strengthen the role of CGE models in measuring policies against key criteria
of Sustainable Development. These developments include (i) decomposition procedures
of general equilibrium effects that deliver a better understanding of key determinants
for policy effects, (ii) the embedding of large-scale general equilibrium models
in an optimal policy framework that considerably widens the scope of policy analysis,
and (iii) systematic sensitivity analysis to test the robustness of model results
with respect to uncertainties in the model's parameterization space. |
Abstract |