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Alexandre Gohin
''A path independent decomposition of the equivalent variation''
( 2006, Vol. 4 No.6 )
This paper proposes a new decomposition of welfare effects simulated by Computable General Equilibrium (CGE) models. Rather than relying on first order approximations, our approach is based on Taylor series approximations of CGE specifications and thus is path independent. This decomposition is useful for explaining the effects of large economic shocks, like international trade agreements.
Keywords: computable general equilibrium model
JEL: D5 - General Equilibrium and Disequilibrium: General
F1 - Trade: General
Manuscript Received : Jan 30 2006 Manuscript Accepted : Feb 01 2006

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