A Simple General Equilibrium Model

  • Manuel Alejandro CardeneteEmail author
  • Ana-Isabel Guerra
  • Ferran Sancho
Part of the Springer Texts in Business and Economics book series (STBE)


The model we describe in this chapter is a skeleton model upon which more in depth specifications will be developed later. Our purpose is to lay out in a very transparent way the main structure of the basic model and we do so by omitting almost all the details that would play a significant role in dealing with real life policy applications. The simple model corresponds to an economy with no government and no foreign trade. The absence of government means that no economic activity is taxed and no government spending is allowed. In a similar vein, all goods are produced and consumed within the country with no domestic goods being diverted abroad as exports and no foreign goods being hauled into the country as imports. The only economic agents are households (or consumers) and firms (or producers).


Output Level Intermediate Input Utility Maximization Problem Social Account Matrix Technical Coefficient 
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Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  • Manuel Alejandro Cardenete
    • 1
    Email author
  • Ana-Isabel Guerra
    • 1
  • Ferran Sancho
    • 2
  1. 1.University Pablo de Olavide EconomicsSevilleSpain
  2. 2.Universitat Autònoma de Barcelona EconomicsCerdanyola del VallèsSpain

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