May I kindly ask this general question?
What is the current view of CGE models in modern macroeconomics? In my graduate program, there was no mention of it. We went from RBC to Smet and Wouters over 2 years. A lot of models in-between (based on standard macro textbooks like Lars Ljungqvist and Thomas J. Sargent’s book and Nancy Stockey’s book), but no mention of CGE models. Not sure why there wasn’t any mention of it…:). I only encountered them in my research.
They look like deterministic DSGE models…so maybe that is why graduate schools don’t typically teach them? Like can we use deterministic DSGE models like CGE models?
Some typical CGE modeling in the literature:
(1) Can the Japanese agri-food producers survive under freer trade? A general equilibrium analysis with farm heterogeneity and product differentiation. OR. (2) Fiscal and social costs of recovery programs for an earthquake disaster in northern Taiwan: A general equilibrium analysis
Basically, they simulate some future event (with no aggregate shocks) and examine how the event affects certain variables. Maybe deterministic DSGE models could be used to answer these country-specific questions (I hope), but I do not usually see papers like that.
Which one would you prefer to answer them? CGE or deterministic DSGE? Or perhaps CGEs are obsolete in macroeconomics? Sorry for long wordy question.