Type of practice:
The Computable General Equilibrium (CGE) Model is used for the purpose of the Impact Assessment on the opening of negotiations on a free trade agreement between the European Union and Japan. The CGE model is a widely used tool in the analysis of policy options when different scenarios are to be simulated and compared to a baseline scenario. It covers global world trade and production, it allows for scale economies and imperfect competition, it includes intermediate linkages between sectors, and it allows for trade to impact on capital stocks through investment effects. The corresponding IA Report (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SWD:2012:0209:FIN:EN:PDF) gives an account of this application.