Integrating Benefit-Cost and Computable General Equilibrium Analysis For Homeland Security Applications

Principal Investigator: Scott Farrow 

A synthesis useful to the Department of Homeland Security and economic analysts on the extent to which a Computable General Equilibrium (CGE) model is or can be theoretically consistent with a benefit-cost framework. Key issues: 1) the conditions, under which a computable general equilibrium model and a benefit-cost framework are consistent, and 2) specific issues in the application of CGE models that may be different from standard benefit-cost practice when used in a partial equilibrium analysis but which may be consistent with a general equilibrium benefit-cost analysis, 3) application issues such as central or peripheral role of system-wide effects, whether there are distinctions between positive or negative shocks, and whether systematic effects may differ across cost or benefit aggregates including those in the labor market.