Do the Computable General Equilibrium (CGE) modelling considers the law of demand and supply?

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Lall B. Ramrattan

Dear Muhammad

There are many approaches to CGE modeling. They may use supply and demand specifications for different sectors. What they tend to compute are market prices and quantities for those specififications for their country, region, or area of study. Then they do what-iffs kinds of policy analyses, such as varying the tax rates and calculate its welfare impact based on surplus analysis--consumer surplus, producer surplus and so on. Then CGE models are used for simulations and prediction.