Approaches to the Dynamization of the CGE Model Applied to the Czech Republic

In this study, two approaches to the recursive dynamization of a computable general equilibrium (CGE) model are applied. Simulations show that the application of Tobin's q investment function leads to a more dynamic capital stock formation accompanied by higher growth of gross domestic product compared to more moderate projections under a linear investment scenario. The study also shows that the Tobin q scenario provides projections that are more consistent with the historical growth rates of investments in the Czech Republic.