New Economics Papers
on Computational Economics
Issue of 2013‒12‒20
nine papers chosen by

  1. The Basic WIOD CGE Model: A computable general equilibrium model based on the World Input-Output Database By Koesler, Simon; Pothen, Frank
  2. Modelling the Effects of Croatia's Accession to the EU: Trade and Agricultural Policies By Boulanger, Pierre; Ferrari, Emanuele; Michalek, Jerzy; Philippidis, George; Vinyes, Cristina
  3. Preference Erosion Effects of Multilateral and Regional Trade Liberalisation: Simulating the EU's Trade Agreements with Mediterranean Countries By Rau, Mari-Luise; Aikaterini, Kavallari
  4. What is the impact of reduced-impact logging (RIL) policy on the Berau Economy? By Martana, Kadim; Lennox, James; Evison, David; Manley, Bruce
  5. How to Implement WTO Scenarios in Simulation Models: Linking the TRIMAG Tariff Aggregation Tool to Capri By Listorti, Giulia; Tonini, Axel; Kempen, Makus; Adenauer, Marcel
  6. Impacts of Exogenous Shocks Using GTAP By durongkaveroj, wannaphong
  7. Clean-development investments : an incentive-compatible CGE modeling framework By Bohringer, Christoph; Rutherford, Thomas F.; Springmannc, Marco
  8. Estimating Net Costs of Adopting Family Friendly Policies at Universities: Description of a Simulation Program By Brown, Clair; Freeman, Eric
  9. How to Improve World Food Supply Stability Under Future Uncertainty: Potential Role of WTO Regulation on Export Restrictions in Rice By Karapinar, Baris; Tanaka, Tetsuji

  1. By: Koesler, Simon; Pothen, Frank
    Abstract: This report presents the Basic WIOD CGE model. The model represents the first implementation of the World Input-Output Database (WIOD) into the CGE framework and is tailored to provide a maximum fit with WIOD data. The model is specifically designed such that it can serve as the basis for research in fields like environmental, climate and trade policy. It incorporates key features of WIOD such as bilateral and bisectoral trade ows, satellite accounts for energy consumption, greenhouse gas as well as other emissions to air on a sectoral level. As all WIOD data is available in the form of a consistent time series ranging from 1995 to 2009, the model can be calibrated to any year within this time period. The model relies on substitution elasticities which are consistently estimated from the same dataset the model itself is calibrated to. Moreover, the data preparation facilities and model are designed deliberately as exible as possible in order to allow researchers to use them as a basis for various applications. This enables researchers to secure the numerous advantages of the WIOD dataset when using CGE models for future research. --
    Keywords: Computable General Equilibrium Models (CGE),Input-Output,World Input Output Database (WIOD)
    JEL: C67 C68 E01
    Date: 2013
  2. By: Boulanger, Pierre; Ferrari, Emanuele; Michalek, Jerzy; Philippidis, George; Vinyes, Cristina
    Abstract: Croatia joined the European Union (EU) on July 1st, 2013. This paper assesses the likely effects of this accession on the agricultural and food sectors, and analyses the impact on the EU, Croatia and their main trading partners. It considers both the harmonization of Croatia's trade instruments with those applied in the EU, and the adoption of the Common Agricultural Policy (CAP). The analysis is carried out using MAGNET, a global recursive dynamic CGE model. Results show that Croatia slightly benefits from its accession to the EU with an increase in GDP, whereas the impact on the EU-27's GDP is insignificant. Total exports of Croatian agricultural products increase by 7.4% and those of food products decrease by 2%. Croatia will face some changes in its production structure. At constant prices, agricultural production benefits (increasing by 1.1%), whereas food production contracts (decreasing by 5.5%). This result sheds some light on competitiveness limitations of the Croatian food processing industry. The scope of this paper is to model both European trade and agricultural policies. It is worth mentioning that other EU policies such as the structural or cohesion policies, and additional gains resulting from the accession such as a less risky investment environment or a more efficient regulatory framework, are not modelled.
    Keywords: CGE, European integration, agricultural policy, agricultural trade, Agricultural and Food Policy, International Relations/Trade,
    Date: 2013–08
  3. By: Rau, Mari-Luise; Aikaterini, Kavallari
    Abstract: Regional Trade Agreements (RTAs) have widely spread in recent years. The World Trade Organisation (WTO) notes that 546 RTAs were notified by January 2013, whereas only 380 were notified by 2007. RTAs have been considered as a stumbling block for the slow progress of the WTO Doha Round, and multilateral liberalisation is said to cause erosion of preferences enjoyed under bilateralism. That is, third country exporters that benefit from multilateral trade liberalization increase their exports, whereas the preferential suppliers in bilateral trade agreements face a decrease of their exports, given the substitutability between export products from different countries. Preference erosion also occurs when countries take up new bilateral trade agreements that can result in “old” trade partner countries losing their preferential treatment. The European Union (EU) has granted preferential market access to a large number of countries and is by far the main trading partner of its neighbouring countries, including Mediterranean partner countries (MED countries). Following the Association Agreements with the EU, there have been efforts of enhanced engagement and co-operation, especially after the Arab spring developments, but negotiations for so called free and comprehensive trade agreements (DCFTAs) are also under way with other partner countries. The objective of this paper is to look into possible preference erosion effects from the perspective of MED countries by depicting recent EU trade agreements as well as multilateral trade liberalisation in a simulation analysis. We apply the MAGNET (Modular Applied General Equilibrium Tool) model that builds upon the GTAP (Global Trade Analysis Project) model in a recursive dynamic general equilibrium framework, with a reference scenario that reflects the economic and population growth paths via most recent projections taken from the literature.
    Keywords: preference erosion, Mediterranean partner countries, trade liberalisation, DCFTAs, CGE modelling, Agribusiness, Agricultural and Food Policy, International Relations/Trade,
    Date: 2013–08
  4. By: Martana, Kadim; Lennox, James; Evison, David; Manley, Bruce
    Abstract: A dynamic recursive CGE model of the Berau District (East Kalimantan Province, Indonesia) was constructed, to analysis the impact of REDD policies. The model was used to simulate a policy to implement reduced-impact logging (RIL) by inducing a seven percent raise in logging cost. Results suggest that impact of the policy to the Berau economy is small. Agricultural-based households’ welfare decreased (with forestry households the most impacted) while non-agricultural households were better off. As logging output declines, other agricultural outputs increase, since factors of production that are not used in the logging sector, are re-employed in other agricultural sectors, especially the oil palm sector.
    Keywords: CGE, RIL, Berau, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Crop Production/Industries, Demand and Price Analysis, Farm Management, Land Economics/Use, Livestock Production/Industries,
    Date: 2013–08
  5. By: Listorti, Giulia; Tonini, Axel; Kempen, Makus; Adenauer, Marcel
    Abstract: Import tariffs are typically defined at a very detailed level, which is then used in trade negotiations. The WTO Framework Agreement of July 2004 proposes the use of a “tiered” formula where tariff lines classified in higher ‘bands’ are subject to proportionally higher cuts. Exceptions to the general rule, like sensitive products, are also defined at the tariff line level. Despite the relevance of tariff structure on trade liberalization, computable partial or general equilibrium models usually represent more aggregated products. In this respect, the literature suggests that market models can be combined with detailed tariff modules. We propose a new methodology to more accurately aggregate tariffs from the tariff line level to the one required by computable equilibrium models. The Tariff Reduction Impact Model for Agriculture (TRIMAG) uses the highest possible level of disaggregation (8 digits) and allows implementing tariff cuts and deriving the domestic price drops foreseen by alternative trade policy scenarios. Aggregated tariffs are derived by considering the substitutability effects in consumption between the tariff lines corresponding to the same aggregate product. We incorporate the tariff aggregates of TRIMAG resulting from a WTO agreement into the Common Agricultural Policy Regionalized Impact (CAPRI) partial equilibrium model. Differences between the standard tariff aggregation of CAPRI and the newly implemented methodology are illustrated. Results show that, when tariff cuts are applied at the 8 digit level, whether the substitution in consumption between tariff lines will result in a lower or higher aggregate tariff cut than the one that should directly be applied to the aggregate product is an empirical question. The selection of a limited number of sensitive tariff lines, if their share in the consumption bundle is high, might significantly raise the tariff for the corresponding aggregated product.
    Keywords: WTO agricultural negotiations, tariff aggregation, linking models, Agricultural and Food Policy, International Relations/Trade,
    Date: 2013–08
  6. By: durongkaveroj, wannaphong
    Abstract: This paper aims at investigating the sectoral impacts from exogenous shocks using CGE model through GTAP model which is implemented by GEMPACK. Three shocks include population growth in NAFTA region, Industrial Growth in Thailand, and Income Growth (measured by GDP) in NAFTA region. The result was very precise and benefit to policymakers corresponding to the objective of CGE model. According to the results, relatively, income growth in NAFTA region yields a highest welfare effect among all shocks which confirms the standard welfare functions.
    Keywords: CGE model, GTAP, exogenous shock
    JEL: A1 C68 E6 E65
    Date: 2013–11–15
  7. By: Bohringer, Christoph; Rutherford, Thomas F.; Springmannc, Marco
    Abstract: The Clean Development Mechanism established under the Kyoto Protocol allows industrialized Annex I countries to offset part of their domestic emissions by investing in emissions-reduction projects in developing non-Annex I countries. Computable general equilibrium analysis of the Clean Development Mechanism's impacts so far mimics the Clean Development Mechanism as a sector emissions trading scheme, thereby overstating its potential to save climate change mitigation costs. This study develops a novel approach that represents the Clean Development Mechanism more realistically by compensating Clean Development Mechanism implementing sectors for additional abatement cost and by endogenizing Clean Development Mechanism credits as a function of investment. Compared with previous representations, the proposed approach is more consistent in its incentive structure and investment characteristics at the sector level. An empirical application of the new methodology demonstrates that the economy-wide cost savings from the Clean Development Mechanism tend to be lower than suggested by conventional modeling approaches while Clean Development Mechanism implementing sectors do not lose in output.
    Keywords: Climate Change Economics,Climate Change Mitigation and Green House Gases,Energy Production and Transportation,Economic Theory&Research,Environment and Energy Efficiency
    Date: 2013–12–01
  8. By: Brown, Clair; Freeman, Eric
    Keywords: Social and Behavioral Sciences
    Date: 2013–08–30
  9. By: Karapinar, Baris; Tanaka, Tetsuji
    Abstract: In recent years, international grain markets have been exposed to considerable price volatility which was partly caused by supply shocks driven by extreme climate events affecting major grain exporters. In addition, a number of exporting countries resorted to distortive trade measures in the form of export restrictions which have led to additional shortages, undermining the reliability of the world trading system. Recent climate studies suggest that climate changeinduced extreme events are likely to increase yield fluctuations. As trade volumes are also projected to increase, export restrictions constitute a systemic threat to the security of the global food supply. However, WTO rules and regulations on export restrictions are lenient, offering ample ‘policy space’ to member countries. In this context, this paper explores the potential welfare implications of productivity shocks and consequent export restrictions imposed on rice. We use a world trade stochastic computable general equilibrium (CGE) model with the Monte Carlo method, taking into account risk factors in the form of a wide range of productivity shocks to world rice supplies. Our findings suggest that welfare losses that are likely to be caused by increased yield variability, due to climate change or other factors, are expected to grow substantially if countries react to productivity shocks by imposing export restrictions. Losses incurred by rice importing countries in Asia and Africa are expected to be particularly high. The paper links these results to potential WTO reform initiatives aiming at improving world food supply stability under future uncertainty.
    Keywords: Food Security and Poverty, International Relations/Trade, Risk and Uncertainty,
    Date: 2013–08

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