A Modeling System for Applied General Equilibrium Analysis

Numerical modeling in the Arrow-Debreu framework has emerged as a consistent approach for economic analysis. A major disadvantage of the applied general equilibrium (AGE) framework has been the high degree of technical expertise required for formulating and solving these models.

This paper describes a micro-computer for AGE modeling. The system, named MPS/GE, combines an efficient solution algorithm with an interactive user-interface. Using MPS/GE, models containing up to 300 prices and activities can be formulated and solved on an IBM PC. This makes AGE modeling accessible to a wider group of policy analysts and educators than was previously the case.