nep-cmp New Economics Papers
on Computational Economics
Issue of 2008‒05‒17
three papers chosen by
Stan Miles
Thompson Rivers University

  1. MACROECONOMIC EFFECTS OF CARBON DIOXIDE EMISSION REDUCTION: A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS FOR MALAYSIA By Al-Amin, Abul Quasem; Abdul Hamid , Jaafar; Chamhuri , Siwar
  2. IMPACT OF INFRASTRUCTURE SPENDING IN SUB-SAHARAN AFRICA: A CGE MODELING APPROACH By Antonio Estache; Jean-François Perrault; Luc Savard
  3. On the Scientific Status of Economic Policy: A Tale of Alternative Paradigms By Giorgio Fagiolo; Andrea Roventini

  1. By: Al-Amin, Abul Quasem; Abdul Hamid , Jaafar; Chamhuri , Siwar
    Abstract: This study analyzes the macroeconomic effects of limiting carbon emissions using computable general equilibrium (CGE) model in the Malaysian economy. Doing so, we developed an environmental computable general equilibrium model and investigate carbon tax policy responses in the economy applying exogenously different degrees of carbon tax into the model. Three simulations were carried out using a Malaysian Social Accounting Matrix. The carbon tax policy illustrates that a 1.21% reduction of carbon emission reduces the nominal GDP by 0.82% and exports by 2.08%; a 2.34% reduction of carbon emission reduces the nominal GDP by 1.90% and exports by 3.97%and a 3.40% reduction of carbon emission reduces the nominal GDP by 3.17% and exports by 5.71%. Imposition of successively higher carbon tax results in increased government revenue from baseline by 26.67%, 53.07% and 79.28% respectively. However, fixed capital investment increased in scenario 1a (1st) by 0.43% but decreased in scenarios 1b (2nd) and 1c (3rd) by 0.26% and 1.79% respectively from the baseline. According to our findings policy-makes should consider initial (1st) carbon tax policy. This policy results in achieving reasonably good environmental impacts without losing the investment, fixed capital investment, investment share of nominal GDP and government revenue.
    Keywords: Emission; Environmental General Equilibrium; Malaysian Economy
    JEL: C68 Q56 B22
    Date: 2008–05–12
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:8667&r=cmp
  2. By: Antonio Estache (World Bank and, the European Centre for Advanced Research in Economics and Statistics at the Free University of Brussels); Jean-François Perrault (GREDI, Faculte d'administration, Université de Sherbrooke); Luc Savard (GREDI, Faculte d'administration, Université de Sherbrooke)
    Abstract: In this paper we construct an archetype CGE model and apply it to six sub-Saharan African countries to explore the impact of scaling up infrastructure in African countries. As part of the debate on the importance of scaling up infrastructure to stimulate growth and provide a push to African economies, some analysts have raised concerns on providing massive financing for the construction of these infrastructures as the process can create major distortion in the economies and have a negative impact by creating Dutch disease symptoms (Adam and Bevan 2006). This study aims to provide some insight into this debate. It draws from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and Fay and Yepes (2003) for operating cost associated with new infrastructure. We compare various infrastructure investment funded with different fiscal tools. These investments scenarios are compared to non productive investment that can be interpreted as a business as usual scenario. Our results show that increase in infrastructure investment does produce slight Dutch disease effects but the negative impacts are strongly dependent on the type of investments performed and type of financing scheme used. Moreover, the growth effects we introduced contribute to attenuate the negative effects.
    Keywords: Investment externalities, foreign aid, exchange rate, fiscal reforms
    JEL: C68 E62 F35 H54
    Date: 2008
    URL: http://d.repec.org/n?u=RePEc:shr:wpaper:08-03&r=cmp
  3. By: Giorgio Fagiolo (Sant'Anna School of Advanced Studies, Pisa, Italy); Andrea Roventini (Università di Verona; Dipartimento di Scienze economiche (Università di Verona))
    Abstract: In the last years, a number of contributions has argued that monetary - and, more generally, economic - policy is finally becoming more of a science. According to these authors, policy rules implemented by central banks are nowadays well supported by a theoretical framework (the New Neoclassical Synthesis) upon which a general consensus has emerged in the economic profession. In other words, scientific discussion on economic policy seems to be ultimately confined to either fine-tuning this ''consensus'' model, or assessing the extent to which ''elements of art'' still exist in the conduct of monetary policy. In this paper, we present a substantially opposite view, rooted in a critical discussion of the theoretical, empirical and political-economy pitfalls of the neoclassical approach to policy analysis. Our discussion indicates that we are still far from building a science of economic policy. We suggest that a more fruitful research avenue to pursue is to explore alternative theoretical paradigms, which can escape the strong theoretical requirements of neoclassical models (e.g., equilibrium, rationality, etc.). We briey introduce one of the most successful alternative research projects - known in the literature as agent-based computational economics (ACE) - and we present the way it has been applied to policy analysis issues. We conclude by discussing the methodological status of ACE, as well as the (many) problems it raises.
    Keywords: Economic Policy, Monetary Policy, New Neoclassical Synthesis, New Keynesian Models, DSGE Models, Agent-Based Computational Economics, Agent-Based Models, Post-Walrasian Macroeconomics, Evolutionary Economics.
    JEL: B41 B50 E32 E52
    Date: 2008–05
    URL: http://d.repec.org/n?u=RePEc:ver:wpaper:47&r=cmp

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