Calibration of CGE models: Methods and current practice

The present article presents a discussion of the methods generally adopted to build the database and to estimate the parameters that requires the implementation of computable general equilibrium models. Basically, this paper deals with “calibration” procedures for CGE models, which are utilized to infer economic data parameters values of a specific period, and that once specified those values in a model applied, reproduce endogenously the data of the period base as a solution. These procedures are the construction of the social accounting matrix, and the utilization of the cross entropy method to assure the consistency; the final calibration of the behavioral parameters and the validation of the model. The main objective is to present the methods, for which some examples were developed, and the related literature that is essential for their implementation.Computable general equilibrium; Calibration