Abstract
Chapter 4 detailed the construction of a social accounting matrix (SAM). This chapter is devoted to explaining the method of estimation of coefficients and exogenous variables in the CGE model, based on the SAM. In estimating these, we cannot apply standard econometric methods. This is because we usually have a limited number of observations but a large number of coefficients and exogenous variables to estimate in the CGE model. This leads to insufficient degrees of freedom if econometric methods are applied.1 To overcome this problem, we employ a unique estimation method called ‘calibration’.
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