A Calibration Procedure of Dynamic CGE Models for Non-steady State Situations Using GEMPACK.

This paper is concerned with the development of a calibration procedure for dynamic CGE models for non-steady state situations. While the literature on calibration of dynamic models mainly concentrates on the process of calibration in the context of a steady state, this essay centers upon the calibration procedure for the case that the model's state variables are not initially at their steady state values. Though this is the more realistic interpretation of a base year's data set it raises a number of additional difficulties including intertemporal feedback and the requirement that the basic data are consistent with the intertemporal equations of the model. These difficulties are discussed and a procedure is presented which can cope with them. Finally, the procedure is applied to an overlapping generations growth model with foresight and the steps involved in calibration are illustrated in detail. Citation Copyright 1999 by Kluwer Academic Publishers.