A CGE can be described by specifying the agents and their behavior, the rules that bring the different markets in equilibrium, and the macroeconomic characteristics.
•Agents and their behavior: The agents of the economy are those which have been identified in the IO, Social Account Matrix(SAM)
-In a IO/SAM multiplier model, producers (activities) produce whatever is demanded and use factors in fixed proportions, whereas in CGE models, producers are profit maximizers (Cost minimizers) and thus choose their level of production and factors combination on the basis of prices.
-On the supply side (activities rows in the IO/SAM), the producers decide whatever to sell on the domestic market or to export on the basis of relative prices.
A CGE can be described by specifying the agents and their behavior, the rules that bring the different markets in equilibrium, and the macroeconomic characteristics.•Agents and their behavior: The agents of the economy are those which have been identified in the IO, Social Account Matrix(SAM)-In a IO/SAM multiplier model, producers (activities) produce whatever is demanded and use factors in fixed proportions, whereas in CGE models, producers are profit maximizers (Cost minimizers) and thus choose their level of production and factors combination on the basis of prices.-On the supply side (activities rows in the IO/SAM), the producers decide whatever to sell on the domestic market or to export on the basis of relative prices.
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