The Theoretical and Empirical Structure of the G-Cubed Model

This paper describes the theoretical and empirical features of G-Cubed, a multicountry, multi-sector intertemporal general equilibrium model. G-Cubed combines the attractive features of macroeconometric models and computable general equilibrium models into a unified framework. It has been used to study a variety of topics including: greenhouse gas policy, trade liberalization, tax policy and macroeconomic policy. This paper is a technical description of the model’s design. April 1995 Revised June 1998 JEL classification C50, D58,E27,E37,F40 * The authors thank Philip Bagnoli, Tomas Bok and Alan Wong for excellent technical assistance in the development of the model described in this paper, and Robert Shackleton and Michael Shelby for many helpful discussions. This project has received financial support from the U. S. Environmental Protection Agency through Cooperative Agreement CR818579-01-0 and from the National Science Foundation through grant SBR-9321010. The views expressed are those of the authors and should not be interpreted as reflecting the views of the trustees, officers or other staff of the Brookings Institution, Australian National University, The University of Texas, the Environmental Protection Agency or the National Science Foundation.