Linking a Microsimulation Model to a Dynamic CGE Model: Climate Change Mitigation Policies and Income Distribution in Australia

Abstract

This paper extends the 'top-down' framework developed by Robilliard et al. (2001) to link a computable general equilibrium (CGE) model to a microsimulation (MS) model. The proposed approach allows for the linking of an MS model to a dynamic (rather than static) CGE model. The approach relies on altering the sample weights in order to reproduce long-term population projections and changes in employment as estimated by the CGE model. The approach is applied to assess the effects of climate- change mitigation policies in Australia from 2005 to 2030 at five-yearly intervals.