Introducing Intertemporal and Open Economy Features in Applied General Equilibrium Models

Abstract

This paper deals with recent developments of computable general equilibrium (CGE) models along two important dimensions: (1) the incorporation of intertemporal aspects of decision-making, and (2) the treatment of international capital flows. The two dimensions are closely related, since intertemporal choices — in particular saving and investment decisions — directly influence the flows of capital between economies that are integrated in world financial markets.