Welfare Analysis: Bridging the Partial and General Equilibrium Divide for Policy Analysis. Issue 1 (25th March 2018)

• Record Type: Journal Article
• Authors: Farrow, Scott; Rose, Adam
• Is Part Of: Journal of benefit-cost analysis. Volume 9:Issue 1(2018)
• Page Start: 67
• Page End: 83
• Publication Date: 2018-03-25
• Subjects: D5, -- D6, -- H4; general equilibrium, -- OMB guidance, -- partial equilibrium, -- theory; Cost effectiveness -- Periodicals; 658.1554
• DOI: 10.1017/bca.2017.29
• Languages: English
• ISSNs: 2194-5888

Abstract

Abstract : Advances in theoretical and computable general equilibrium modeling brought their conceptual foundations more in line with standard microeconomic constructs. This reduced the theoretical gap between welfare measurements using a partial or a general equilibrium approach. However, the separation of the partial and general equilibrium literatures lingers in many applications that this manuscript seeks to bridge. The now shared conceptual foundations, the importance of functional specification, the role of common price movements and closure rules are discussed. The continuing stricture in U.S. Government guidelines against including secondary effects in welfare measures is questioned.