Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/103541 
Authors: 
Year of Publication: 
2014
Series/Report no.: 
ZEW Discussion Papers No. 14-092
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
The specification of parameters is a crucial task in the development of economic models. The objective of this paper is to improve the standard parameter specification of computable general equilibrium (CGE) models. On that account, we illustrate how Optimal Fingerprint Detection Methods (OFDM) can be used to identify appropriate values for various parameters. This method originates from climate science and combines a simple model validation exercise with a structured sensitivity analysis. The new approach has three main benefits: 1) It uses a structured optimisation procedure and does not revert to ad-hoc model improvements. 2) It allows to account for uncertainty in parameter estimates by using information on the distribution of parameter estimates from the literature. 3) It can be applied for the specification of a range of parameters required in CGE models, for example for the definition of elasticities or productivity growth rates.
Subjects: 
CGE modelling
sensitivity analysis
model validation parameter specification
substitution elasticities
JEL: 
C52
C68
D58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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