ABSTRACT
General equilibrium theory, with its abstract axioms and topological theorems, seems to live in a world apart from applied economic analysis. Economists who crunch numbers and engage in policy debates are often out of touch with the latest work by economic theorists (and vice versa). Yet the language of general equilibrium finds a distinct echo in the analytical apparatus of empirical economics. So-called computable general equilibrium (CGE) models have become common in many policy applications – including an area we have been involved in, namely the analysis of the environmental impacts of international trade.
