Calibration procedure and the robustness of CGE models: Simulations with a model for Poland

Calibration is commonly used in order to specify a numerical computable general equilibrium model. As it involves the evaluation of model parameters on the basis of a single observation, there is a concern about the reliability of the results obtained from the model. A one-sector model for the Polish economy is specified and calibrated using various years as a benchmark equilibrium. Different assumptions are also made about some elasticity parameters. The model response is examined by simulating an increase in government expenditure. The results are quite robust to the choice of the base year but very sensitive to some elasticity parameters such as trade substitution elasticities.