Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Computable general equilibrium models

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Policies affecting resource allocation across tradable sectors and those affecting the incentives to produce tradable activities are key determinants of macroeconomic balance and growth. Computable general equilibrium models have made significant contributions to both types of policies. With advancements in computing power and software, these models have become easy to implement and are now widespread. The question then is when and how to formulate them to avoid the 'black box' syndrome. This book seeks to address these issues through carefully selected essays that analyse how to model general equilibrium linkages in a single economy, across developing and developed economies, and across both micro and macro policies. Micro policies examined include tariffs quotas and VERs, the choice of taxes to maximize government revenue, migration and remittances, and the political economy of tariff setting. Applications on macro policies cover capital inflows, real exchange rate determination, and the modeling of the effects of adjustment policies on income distribution. The book provides insights on the development of a family of models for diverse policy choices, focusing on the ways to model the following: links between tradable and non-tradable activities, labor markets, and portfolio choices given limited capital mobility. Selected essays are all inspired by specific policy problems, including the adaptation to external shocks (i.e. oil), consequences of capital inflows, determinants of migration and associated remittances, the productivity of foreign aid, and rent-seeking activities under trade regimes with non-price trade restrictions. Examples in this book lay out the theoretical foundations, alongside a variety of applications, to help formulate coherent and transparent models for policy analysis. Archetype economies are extensively used to show how differences in economic structure influence the effects of policies. Graduate students and policy analysts interested in modeling will find this a useful compendium of studies.

Equilibrium (Economics) --- Computable general equilibrium models --- Developing countries --- Economic policy.

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper uses a computable general equilibrium model Maquette for Millennium Development Goal Simulations (MAMS) calibrated to Mongolia to investigate how the development of major mining projects leads to Dutch disease. The simulations suggest that the process is complex, with the relative strength of the different spending and resource movement channels determined by structural features of the economy, such as factor input needs of the mining sector and substitution elasticities, and how mineral windfalls are eventually spent. In Mongolia, mining sector demand for domestic factor inputs explains two-thirds of the appreciation of the real exchange rate, with demand for labor, aquasi-fixed factor, the most potent channel for transmitting Dutch disease. The simulations also suggest that public policies may only play a limited role in limiting Dutch disease, even if growing fiscal revenues are channeled toward productivity-enhancing public investment rather than public consumption or lower taxes. This finding suggests that policy makers face real trade-offs, namely that, as an equilibrium response, Dutch disease is unavoidable and at odds with an export-led, manufacturing-oriented development strategy unless resources are left in the ground (or mining earnings are saved abroad). If the objective is to limit Dutch disease, then the simulations point to policies that minimize the usage of domestic inputs by the mining sector, or that accommodate the growing demand for key inputs such as labor e.g. through immigration. Regarding spending, policy makers should channel mining revenues toward public investment, to expand the economy's long-run supply potential. Where large direct income flows from the mining sector to households are important, monetary policy may be more useful than fiscal policy in constraining private spending.

CGE --- Computable General Equilibrium --- Dutch Disease --- Mams --- Mdgs --- Millennium Development Goal

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This study uses a computable general equilibrium model to analyze various policy scenarios for a carbon tax on greenhouse gas emissions from petroleum fuels and kerosene in Ethiopia. The carbon tax starts at USD 5 per ton of carbon dioxide in 2018 and rises to USD 30 per ton in 2030. Different scenarios examine the impacts with revenue recycling through a uniform sales tax reduction, reduction of labor income tax, reduction of business income tax, direct transfer back to households, and use by the government to reduce debt. Because petroleum fuels and kerosene are a relatively small part of the Ethiopian economy, the carbon tax has quite small impacts on overall economic activity while having a notable proportionate impact on greenhouse gas emissions from these energy sources, depending on the recycling scenario. The carbon tax can raise significant revenue-up to USD 800 million per year by 2030. The impacts on the poor through increased cost of living are not that large, since the share of the poor in total use of petroleum fuels and kerosene is small. In terms of income effects through employment changes, urban households tend to experience more impacts than rural households, but the results also depend on the household skill level and the revenue recycling scenario.

Carbon Tax --- CGE Model --- Computable General Equilibrium Model --- Distributional Impacts --- Environment --- Poverty Reduction --- Trade Policy

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

China's Belt and Road Initiative aims to improve connectivity between China and more than 70 countries through infrastructure investment and regional cooperation. The initiative has the potential to accelerate significantly the rate of economic integration and development in the region, as trade costs decline. The goals of this paper are to (i) study the impacts of infrastructure improvements on Belt and Road Initiative and non-Belt and Road Initiative countries' trade flows, growth, and poverty; and (ii) suggest policies that would help maximize gains from the Belt and Road Initiative-induced trade cost declines. The analysis captures the trade costs reductions as a result of infrastructure improvements. The findings indicate that the Belt and Road Initiative would be largely beneficial. First, global income increases by 0.7 percent (in 2030 relative to the baseline). This translates into almost half a trillion dollars in 2014 prices and market exchange rates. The Belt and Road Initiative area captures 82 percent of the gain, with the largest percent gains in East Asia. Second, globally, the Belt and Road Initiative could contribute to lifting 8.7 million people from extreme poverty and 34 million from moderate poverty. Third, the initiative would lead to a modest increase in global carbon dioxide emissions, with a complex set of positive and negative outcomes at the national level for other types of emissions.

Belt And Road Initiative --- Computable General Equilibrium --- Emissions --- Environment And Trade --- Infrastructure --- Infrastructure Economics and Finance --- Poverty --- Transport