ABSTRACT
This chapter demonstrates how a simple static computable general equilibrium (CGE) model of the Indonesian economy can be constructed and parameterised using the social accounting matrix (SAM) as a database. It will also convert the constant labour supply and capital stock in the static model to dynamic specifications allowing formulation and solution of a dynamic version of the CGE model. This being the first chapter in the book that applies CGE models, it is natural to open with a short review of the development of the CGE model as a major tool for analysis and policy making.
