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Welfare Analysis: Bridging the Partial and General Equilibrium Divide for Policy Analysis

  • Scott Farrow (a1) (a2) and Adam Rose (a3) (a4)
Abstract

Advances in theoretical and computable general equilibrium modeling brought their conceptual foundations more in line with standard microeconomic constructs. This reduced the theoretical gap between welfare measurements using a partial or a general equilibrium approach. However, the separation of the partial and general equilibrium literatures lingers in many applications that this manuscript seeks to bridge. The now shared conceptual foundations, the importance of functional specification, the role of common price movements and closure rules are discussed. The continuing stricture in U.S. Government guidelines against including secondary effects in welfare measures is questioned.

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Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
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Footnotes
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Appreciation is extended to V. Kerry Smith, participants at the 2017 Society for Benefit-Cost Analysis Annual Conference and the EPA/NCEE seminar series, and an anonymous referee for comments. We thank the Department of Homeland Security for financial support.

Footnotes
References
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Journal of Benefit-Cost Analysis
  • ISSN: 2194-5888
  • EISSN: 2152-2812
  • URL: /core/journals/journal-of-benefit-cost-analysis
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