An approach to macroeconomic model building based on social accounting principles

Abstract

The paper sets out, using the example of a small comparative static model of Thailand for 1980, an approach to macro-economic model building which is based on having two versions of a social accounting matrix (SAM), one version contains data for a base year, while the cell entries for the other are algebraic expressions for the determination of the corresponding transaction values. Thus the model is developed in transaction value (TV) form, and this is one distinguishing feature of the approach. Other features derive from different aspects of the relationship between the two SAMs. It is argued that the approach has distinct advantages for model description, calibration and solution and that these are important if models are to be used for policy purposes which place a premium on intelligibility and replicability within the context of a flexible model capability.

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