ABSTRACT
This book has displayed so far models applied to developing and transiting countries. SAM and CGE models are equally suited to deal with policy analysis for developed economies; and this is the focus of the current and next chapter. Application of these models to a developed economy can contribute to more insight into policy making. There are various reasons supporting this ambitious statement. In terms of policy making, the SAM is specially suited for weighing the trade-off between growth and distribution in the context of a growing share of the non-earning population, and the necessity of institutional transfers to mend the situation, which are major concerns in the welfare state. The CGE model, whose basic premise is reliance on market mechanisms for clearance of demand and supply, is also more likely to be applicable in a developed than in developing or transiting economies.
