Skip to main content
SpringerLink
Log in

An evaluation of the performance of an applied general equilibrium model of the Spanish economy

  • Symposium
  • Published:
Economic Theory Aims and scope Submit manuscript

Summary

In 1985–86 the authors were members of a team that constructed a static applied general equilibrium model that was used to analyze the impact on the Spanish economy of the 1986 fiscal reform, which accompanied Spain's entry into the European Community. This paper compares the results obtained to recently published data for 1985–87; we find that the model performed well in predicting the changes in relative prices and resource allocation that actually occurred, particularly if we incorporate exogenous shocks that affected the Spanish economy in 1986. We also analyze the sensitivity of the results to alternative specifications of the labor market and macroeconomic closure rules; we find that the central results are robust.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Andrés, J., Dolado, J. J., Molinas, C., Sebastián, M., Zabalza, A.: The influence of demand and capital constraints on Spanish unemployment. Working Paper SGPE-D-88005. Ministerio de Economía y Hacienda, 1988

  • Armington, P.: A theory of demand for products distinguished by place of production.IMF Staff Papers 16, 159–78 (1969)

    Google Scholar 

  • Auerbach, A. J., Kotlikoff, L. J.:Dynamic fiscal policy. Cambridge: Cambridge University Press 1987

    Google Scholar 

  • Bergman, L., Jorgenson, D. W., Zalai, E.:General equilibrium modeling and economic policy analysis. Oxford: Basil Blackwell, 1990

    Google Scholar 

  • Bernheim, B. D., Sholz, K. J., Shoven, J. B.: Consumption taxation in a general equilibrium model: How reliable are simulation results? In: Bernheim, B. D., Shoven, J. B. (eds.)National savings and economic performance. Chicago: University of Chicago Press 1991

    Google Scholar 

  • Dervis, K., de Melo, J., Robinson, S.:General equilibrium models for development policy. Cambridge: Cambridge University Press 1982

    Google Scholar 

  • Devarajan, S., Sierra, H.: Growth without adjustment: Thailand, 1973–1982. Unpublished manuscript. World Bank, 1986

  • Goulder, L. H., Summers, L. H.: Tax policy, asset prices, and growth: A general equilibrium analysis.J. Publ. Econ. 38, 265–96 (1989)

    Google Scholar 

  • Harrison, G. W., Vinod, H. D.: The sensitivity analysis of applied general equilibrium models: Completely randomized factorical sampling designs.Rev. Econ. Stat. 74, 357–62 (1992)

    Google Scholar 

  • Johansen, L.:A multi-sectoral study of economic growth. Amsterdam: North Holland 1960

    Google Scholar 

  • Jorgenson, D. W., Yun, K.-Y.: Tax policy and U.S. economic growth. In: Bergman, L., Jorgenson, D. W., Zalai, E. (eds.)General equilibrium modeling and economic policy analysis. Oxford: Basil Blackwell 1990

    Google Scholar 

  • Kehoe, T. J., Serra-Puche, J.: A general equilibrium appraisal of energy policy in Mexico.Emp. Econ. 16: 71–93 (1991)

    Google Scholar 

  • Kehoe, T. J., Manresa, A., Noyola, P. J., Polo, C., Sancho, F., Serra-Puche, J.: Modelos de equilibrio general aplicado (MEGA): Un análisis del impacto del impuesto sobre el valor añadido (IVA) sobre la economía Española. Unpublished manuscript. Instituto de Estudios Fiscales, 1985a

  • Kehoe, T. J., Manresa, A., Noyola, P. J., Polo, C., Sancho, F., Serra-Puche, J.: A social accounting system for Spain: 1980. Working Paper 63.86. Departament d'Economia i d'Història Econòmica, Universitat Autònoma de Barcelona, 1985b

  • Kehoe, T. J., Manresa, A., Noyola, P. J., Polo, C., Sancho, F., Serra-Puche, J.: A general equilibrium analysis of the indirect tax reform in Spain. Working Paper 66.86. Department d'Economia i d'Història Econòmica Universitat Autònoma de Barcelona, 1986a

  • Kehoe, T. J., Manresa, A., Noyola, P. J., Polo, C., Sancho, F., Serra-Puche, J.: Polìtica econòmica i equilibri general. Quins són els efectes de l'IVA?Rev. Econ. Catalunya 2, 76–81 (1986b)

    Google Scholar 

  • Kehoe, T. J., Manresa, A., Noyola, P. J., Polo, C., Sancho, F.: A general equilibrium analysis of the 1986 tax reform in Spain.Eur. Econ. Rev. 32, 334–42 (1988a)

    Google Scholar 

  • Kehoe, T. J., Manresa, A., Polo, C., Sancho, F.: Una matriz de contabilidad social de la economía española.Estad. Españ. 30, 5–33 (1988b)

    Google Scholar 

  • Kehoe, T. J., Manresa, A., Polo, C., Sancho, F.: Un análisis de equilibrio general de la reforma fiscal de 1986 en España.Invest. Econ. 13, 337–85 (1989)

    Google Scholar 

  • Mercenier, J., Srinivasan, T. N.:Applied general equilibrium and economic development. Ann Arbor: University of Michigan Press 1994

    Google Scholar 

  • Parmenter, B. R., Meagher, G. A., McDonald, D., Adams, P. D.: Structural change in the 1970s: Historical simulations with ORANI-F. IAESR Working paper. University of Melbourne, 1990

  • Piggott, J., Whalley, J.:New developments in applied general equilibrium analysis. Cambridge: Cambridge University Press 1985

    Google Scholar 

  • Scarf, H. E., Shoven, J. B.:Applied general equilibrium analysis. Cambridge: Cambridge University Press 1984

    Google Scholar 

  • Shiells, C. R., Reinert, K. A.: Armington models and terms of trade effects: Some econometric evidence for North America.Can. J. Econ. 26, 299–316 (1993)

    Google Scholar 

  • Shoven, J. B., Whalley, J.: Applied general equilibrium models of taxation and international trade.J. Econ. Lit. 22, 1007–51 (1984)

    Google Scholar 

  • Whalley, J.: Hidden challenges in recent applied general equilibrium exercises. In: Piggott, J., Whalley, J. (eds.)New developments in applied general equilibrium analysis, pp. 25–41. Cambridge: Cambridge University Press 1985

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, University of Minnesota, 55455, Minneapolis, MN, USA

    Timothy J. Kehoe

  2. Research Department, Federal Reserve Bank of Minneapolis, 250 Marquette Ave., 55480, Minneapolis, MN, USA

    Timothy J. Kehoe

  3. Departament d'Economia i d'Història Economica, Universitat Autònoma de Barcelona, E-08193, Bellaterra, Barcelona, SPAIN

    Timothy J. Kehoe, Clemente Polo & Ferran Sancho

Authors
  1. Timothy J. Kehoe
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Clemente Polo
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Ferran Sancho
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

We gratefully acknowledge financial support from NSF Grant SES 89-22036 (Kehoe) and CICYT Grant PB 89 + 0309 (Polo and Sancho). We thank participants in the IIASA Applied General Equilibrium Conference, Laxenburg, Austria, August 1991; the International Trade Workshop at UCLA, March 1992; the Graduate Public Finance Course at the University of Minnesota, Winter 1993; Antonio Gomez Gomez-Plana; and Betsy Caucutt for helpful suggestions. Above all, we wish to thank our colleagues who have worked with us on the MEGA (Model d'Equilibri General Aplicat) Project at the Universitat Autònoma de Barcelona: Antonio Manresa, Pedro Javier Noyola, Jaime Serra-Puche, Cristina Echevarria, Walter Garcia, Ana Laborda, and Xavier Ramirez. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Kehoe, T.J., Polo, C. & Sancho, F. An evaluation of the performance of an applied general equilibrium model of the Spanish economy. Econ Theory 6, 115–141 (1995). https://doi.org/10.1007/BF01213943

Download citation

  • Received:

  • Revised:

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF01213943

Keywords

Search

Navigation