AN EVALUATION OF THE PERFORMANCE OF AN APPLIED GENERAL EQUILIBRIUM-MODEL OF THE SPANISH ECONOMY

In 1985-86 the authors were members of a team that constructed a stati c applied general equilibrium model that was used to analyze the impac t on the Spanish economy of the 1986 fiscal reform, which accompanied Spain's entry into the European Community. This paper compares the res ults obtained to recently published data for 1985-87; we find that the model performed well in predicting the changes in relative prices and resource allocation that actually occurred, particularly if we incorp orate exogenous shocks that affected the Spanish economy in 1986. We a lso analyze the sensitivity of the results to alternative specificatio ns of the labor market and macroeconomic closure rules; we find that t he central results are robust.