A General Equilibrium Approach to the Analysis of Monetary and Fiscal Policies

We construct a general equilibrium model of an open economy and develop a computational technique for deriving a market-clearing solution to the model. The model allows for disaggregated commodities, taxes, and tariffs. It includes a government that is an active participant in the economy as a producer of public goods. The main innovation of the paper is to incorporate financial assets. Current general equilibrium models that do permit the inclusion of non-neutral financial assets are unable to cope with large numbers of commodities and differentiated taxes