The genesis of the work was our warm-up to evaluate the assistance provided to emission intensive trade exposed industries under the abandoned carbon pollution reduction scheme. The nonlinear programming approach to Computable General Equilibrium (CGE) modelling described here allows the inclusion detailed engineering/economic principles underlying industries and the direct modelling of policies.

The approach overcomes the issue of linking what are essentially incompatible models (for example, an electricity model and a CGE model - see related publication) when trying understand and evaluate the impact of policies on certain industries (such as electricity).

The paper here presents the proof of concept using a standard small CGE model.

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The Net Social Revenue Approach to Solving Computable General Equilibrium Models - Staff Working Paper (PDF - 562 Kb)
The Net Social Revenue Approach to Solving Computable General Equilibrium Models - Staff Working Paper (Word - 158 Kb)

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GAMS code (GMS - 68 Kb)
GAMS results (LST - 192 Kb)

Related publications

Unifying Partial and General Equilibrium modelling for applied policy analysis

This staff working paper explains how to embed a Partial Equilibrium (PE) model of the electricity generation and transmission sector within a simplified Computable General Equilibrium (CGE) model to create a single model that is able to provide the types of insights typically only available from each model separately.

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