nep-cmp New Economics Papers
on Computational Economics
Issue of 2009‒10‒03
five papers chosen by
Stan Miles
Thompson Rivers University

  1. Climate Change Assessment and Agriculture in General Equilibrium Models: Alternative Modeling Strategies By Ruslana Rachel Palatnik; Roberto Roson
  2. Why is the Doha development agenda failing? And what can be done?: A computable general equilibrium-game theoretical approach By Bouet, Antoine; Laborde, David
  3. Agricultural trade liberalization and poverty in Brazil: By Filho, Joachim Bento de Souza Ferreira
  4. The potential cost of a failed doha round: By Bouet, Antoine; Debucquet, David Laborde
  5. Economywide impacts of climate change on agriculture in Sub-Saharan Africa: By Calzadilla, Alvaro; Zhu, Tingju; Rehdanz, Katrin; Tol, Richard S.J.; Ringler, Claudia

  1. By: Ruslana Rachel Palatnik (Fondazione Eni Enrico Mattei); Roberto Roson (Universitá Ca’ Foscari di Venezia)
    Abstract: Agricultural sectors play a key role in the economics of climate change. Land as an input to agricultural production is one of the most important links between economy and the biosphere, representing a direct projection of human action on the natural environment. Agricultural management practices and cropping patterns have a vast effect on biogeochemical cycles, freshwater availability and soil quality. Agriculture also plays an important role in emitting and storing greenhouse gases. Thus, to consistently investigate climate policy and future pathways for the economic and natural environment, a realistic representation of agricultural land-use is essential. Computable General Equilibrium (CGE) models have increasingly been used to this purpose. CGE models simulate the simultaneous equilibrium in a set of interdependent markets, and are especially suited to analyze agricultural markets from a global perspective. However, modelling agricultural sectors in CGE models is not a trivial task, mainly because of differences in temporal and geographical aggregation scales. The aim of this study is to overview some proposed modelling strategies, by reviewing the available literature and highlighting the different trade-offs involved in the various approaches.
    Keywords: Computable General Equilibrium (CGE), Partial Equilibrium (PE), Agriculture, Land Use, Climate Change
    JEL: C68 D58 Q24 Q51 Q54
    Date: 2009–08
  2. By: Bouet, Antoine; Laborde, David
    Abstract: "We herein use a world Computable General Equilibrium (CGE) model to simulate 143 potential trade reforms and seek solutions to the issues hampering progress in the Doha Development Agenda (DDA). Inside the domain defined by all these possible outcomes, we apply the axiomatic theory of bargaining and select the Nash solution of cooperative games. The solutions vary according to the objective functions adopted by the trade negotiators. When real income is the objective and services are excluded, or when optimizing terms of trade is the objective, the Nash solution is the status quo. Trade liberalization is feasible only when the negotiators focus on national exports or Gross Domestic Product (GDP). Our assessment of some possible solutions reveals that excluding members having a GDP below a certain threshold improves the bargaining process, regardless of the governments' objective. Formation of coalition, such as the G20, constitutes an option for its members to block outcomes imposed by rich members. We also find that side payments may be a solution, but represent a very high share of the global income gain." from authors' abstract
    Keywords: Trade negotiations, Computable general equilibrium (CGE) modeling, Nash solution, Side payments, Cooperative games, Globalization, Markets, Doha Development Agenda,
    Date: 2009
  3. By: Filho, Joachim Bento de Souza Ferreira
    Abstract: "This paper addresses the potential effects of a world agricultural trade liberalization scenario on poverty and regional income distribution in Brazil, using an interregional applied general equilibrium (AGE) and microsimulation model of Brazil, tailored for income distribution and poverty analysis. The model distinguishes 10 different labor types and 270 different household expenditure patterns. Income can originate from 41 different production activities (which produce 52 commodities), located in 27 states in the country. The AGE model is linked to a microsimulation model that includes 112,055 Brazilian households and 263,938 adults. The scenario is generated from a previous run of the MIRAGE model, which assesses the likely impacts of a Doha Development Agenda agreement, based on the draft on agriculture by Crawford Falconer and the draft on nonagricultural market access by Don Stephenson. The results of this global scenario are transmitted to the Brazilian model. Poverty and income distribution indexes are computed over the entire sample of households and persons, before and after the introduction of policy shocks. Model results show that the simulated trade policy shocks have positive effects on poverty and income distribution in Brazil. The simulated effects on poverty and income distribution are positive in aggregate, with benefits concentrated in the poorest households. The results, however, differ across the Brazilian territory, worsening in some important states, where the poverty and inequality indicators increase. The gains in agriculture are found to benefit all the agents involved, from workers to small producers to large farmers, rejecting the idea that just large farmers would gain." from authors' abstract
    Keywords: Economic integration, Poverty, Income distribution, Globalization, Markets, trade,
    Date: 2009
  4. By: Bouet, Antoine; Debucquet, David Laborde
    Abstract: "This study offers new conclusions on the economic cost of a failed Doha Round. The first section is devoted to an analysis of how trade policies evolve in the long and medium runs. We show that even under normal economic conditions, policymakers modify tariffs to cope with the evolution of world markets. We then use the MIRAGE Computable General Equilibrium model to assess the potential outcome of the Doha Round, and then examine four protectionist scenarios. Under a scenario where applied tariffs of major economies increase up to the currently bound tariff rates, we find that world trade decreases by 7.7 percent and world welfare drops by US$353 bn. We then compare a resort to protectionism when the Doha Development Agenda (DDA) is implemented versus a resort to protectionism when the DDA is not implemented. We find that this trade agreement could prevent the potential loss of US$ 809 bn of trade, and could therefore act as an efficient multilateral insurance scheme against the adverse consequences of “beggar-thy-neighbor” trade policies." from authors' abstract
    Keywords: Trade negotiations, Computable general equilibrium (CGE) modeling, Bound duties, Domestic support, Globalization, Markets, Doha Development Agenda,
    Date: 2009
  5. By: Calzadilla, Alvaro; Zhu, Tingju; Rehdanz, Katrin; Tol, Richard S.J.; Ringler, Claudia
    Abstract: "Two possible adaptation options to climate change for Sub-Saharan Africa are analyzed under the SRES B2 scenario. The first scenario doubles the irrigated area in Sub-Saharan Africa by 2050, compared to the baseline, but keeps total crop area constant. The second scenario increases both rainfed and irrigated crop yields by 25 percent for all Sub-Saharan African countries. The two adaptation scenarios are analyzed with IMPACT, a partial equilibrium agricultural sector model combined with a water simulation module, and with GTAP-W, a general equilibrium model including water resources. The methodology combines the advantages of a partial equilibrium approach, which considers detailed water-agriculture linkages, with a general equilibrium approach, which takes into account linkages between agriculture and nonagricultural sectors and includes a full treatment of factor markets. The efficacy of the two scenarios as adaptation measures to cope with climate change is discussed. Due to the limited initial irrigated area in the region, an increase in agricultural productivity achieves better outcomes than an expansion of irrigated area. Even though Sub-Saharan Africa is not a key contributor to global food production or irrigated food production, both scenarios help lower world food prices, stimulating national and international food markets." from authors' abstract
    Keywords: Computable general equilibrium, Climate change, Agriculture, integrated assessment, Sub-Saharan Africa,
    Date: 2009

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