Application of computable general equilibrium (CGE)

Thursday, 25 May 2017 Read 274 times Written by 

Application of computable general equilibrium (CGE) to climate change mitigation policy: A systematic review

Kazeem Alasinrin Babatundea,b,*, Rawshan Ara Begumc, Fathin Faizah Saida

a School of Economics, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600 UKM Bangi, Selangor, Malaysia

b Department of Economics, College of Management Sciences, Alhikmah University, Ilorin, Nigeria

c Institute of Climate Change (IPI), Universiti Kebangsaan Malaysia, 43600 UKM Bangi, Selangor, Malaysia



With the growing literature related to climate change mitigation measures and policy interventions, a systematic review of the application of computable general equilibrium (CGE) model is inevitable. Therefore, this article aims to characterise the relevant studies, define a comparative framework to identify the current state-of-the-art and the gaps in applied general equilibrium models. Firstly, the systematic review found a total of 301 research articles from Scopus and Web of Science databases and finally analysed 154 articles based on inclusion and exclusion criteria from 67 refereed journals. The review analysis found that application of CGE model is very vital in addressing climate change mitigation issues at the national, regional and global levels. However, China attracted the most substantial research interests followed by the USA, India and Australia, among others, which are in line with their share of greenhouse gas emissions in the world. Most of the research themes focus on the carbon tax, emission reduction target, emission trading, renewable energy, energy efficiency, and carbon capture and storage as primary drivers of low carbon economy. Nevertheless, there is a trend of employing more static CGE model compared to the dynamic CGE, although application of the latter has a limitation of providing right inputs to the macroeconomic policy. Finally, research directions and gaps envision other complementary models such as dynamic stochastic general equilibrium (DSGE) and agent-based model (ABM) for proper policy interventions.


Corresponding author at: School of Economics, Faculty of Economics and Management,Universiti

Kebangsaan Malaysia, 43600 UKM Bangi, Selangor, Malaysia.

Received 21 August 2016; Received in revised form 5 February 2017; Accepted 27 April 2017

Renewable and Sustainable Energy Reviews 78 (2017) 61–71

1364-0321/ © 2017 Elsevier Ltd. All rights reserved.


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