Extended Sensitivity Analysis for Applied General Equilibrium Models

Previous sensitivity analysis procedures for applied general equilibrium models have focussed on the values of exogenously assigned elasticity parameters, while the calibrated parameters - those that are obtained from combining elasticity information with flow or stock data - have been largely ignored. Calibrated parameters are central to a model's specification, and uncertainty surrounding their values affects the credibility of the model's results. This paper introduces and illustrates a calibrated parameter sensitivity analysis (CPSA) which, when combined with previous elasticity sensitivity analysis procedures in an 'extended sensitivity analysis', allows modelers to undertake sensitivity analysis over the full set of model parameters