| Tools for partial equilibrium models |
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Impact analysis: Partial equilibrium models
Partial equilibrium models equate supply and demand in one or more markets so that the markets clear at their equilibrium price levels. This makes prices endogenous. Partial equilibrium models do not include all production and consumption accounts in an economy, nor do they attempt to capture all of the economy's markets and prices. The approach allows the analyst to trace the impact of changes in one market on other markets, but it only captures such changes in the markets included in the model. Partial equilibrium models are best suited to analyzing sector reforms that are less likely to have large impacts on macroeconomic aggregates.
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