ORANI-IT: A Computable General Equilibrium Model of Italy
Government of the Italian Republic (Italy), Ministry of Economy and Finance, Department of the Treasury Working Paper No. 7
50 Pages Posted: 27 Sep 2014
Date Written: Agosto 1, 2014
This paper presents the comparative-static national disaggregate Computable General Equilibrium (CGE) model of the Italian economy, ORANI-IT, which represents the starting point to the development of a tax CGE model of Italy. The model, designed at the Department of Treasury of the Italian Ministry of the Economy and Finance, in collaboration with the Centre of Policy Studies (CoPS), and currently managed at Sogei S.p.A. (IT Economia - Modelli di Previsione ed Analisi Statistiche), is intended for policy analysis. The aim of this paper is to provide a complete description of the theoretical specification of the model and to illustrate the process of compiling the model’s database. Departing from the core structure, features of the Italian model in the context of ORANI-style models, developed at CoPS, are highlighted, as data availability allowed us to improve the modelling of the investment matrix and the demand of labour. The result is a more reliable model with a broader level of analysis. The paper concludes with the model’s validation, which among several checks, consists in an illustrative two targets/two instruments simulation.
Keywords: Computable general equilibrium (CGE) model, Model’s validation, Italy
JEL Classification: C68, E10, E60
Suggested Citation: Suggested Citation