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In this paper, a novel approach to modelling education and human capital formation in a computable general equilibrium model is proposed. Rather than adopting microeconomic-based assumptions of human capital formation, the method is based on an empirical relationship between labor force composition and expenditure on education services. It is found some robust correlation between workers’ shares in the labor force and educational expenditure, in real terms and per capita. To assess the implications of these findings, the impact of an increase in public expenditure devoted to education is simulated in a conventional CGE model for Ethiopia. The simulation results highlight the existence of a multiplicative effect, such that the overall increase in the supply of education services, in the final equilibrium state, is more than three times larger than the initial demand push. This comes associated with a positive supply shock, entailing gains in productivity, income, and welfare, as well as changes in the structure of the economy.

Previsiones macroeconómicas para la economía internacional, española y andaluza realizada por el equipo del Departamento de Economía de la Universidad Loyola.

Previsiones macroeconómicas para la economía internacional, española y andaluza realizada por el equipo del Departamento de Economía de la Universidad Loyola.

Previsiones macroeconómicas para la economía internacional, española y andaluza realizada por el equipo del Departamento de Economía de la Universidad Loyola.

8.1. The Trans-European Transport Network and its Evolution (1996–2013) Even before the Trans-European Transport Network (Ten-T) appeared formally in the Maastricht Treaty in 1992, European transnational transport flows have followed a pattern recalling this network. Ten-T networks (road, rail and inland navigation) have been, and still are, the beneficiary of a vast program of public investment, publicly funded by the European Union and Member States, and partly financed by the private secto...

This outlook provides a focused assessment of the state of public capital in the major European countries and identifies areas where public investment could contribute more to stable and sustainable growth. A European Public Investment Outlook brings together contributions from a range of international authors from diverse intellectual and professional backgrounds, providing a valuable resource for the policy-making community in Europe to feed their discussion on public investment. The volume both offers sector-specific advice and highlights larger areas which should be prioritized in the policy debate (from transport to social capital, R&D and the environment). The Outlook is structured into two parts: the chapters of Part I respectively explore public investment trends in France, Germany, Italy, Spain and Europe as a whole, and illuminate how the legacy of the 2008 Global Financial Crisis is one of insufficient public investment. Part II investigates some areas into which resources could be channelled to reverse the recent trend and provide European economies with an adequate public capital stock. The essays in this outlook collectively foster a broad approach to and definition of public investment, that is today more relevant than ever. Offering up a timely and clear case for the elimination of bias against investment in European fiscal rules, this outlook is a welcome contribution to the European debate, aimed both at policy makers and general readers. As with all Open Book publications, this entire book is available to read for free on the publisher’s website. Printed and digital editions, together with supplementary digital material, can also be found at www.openbookpublishers.com

Previsiones macroeconómicas para la economía internacional, española y andaluza realizada por el equipo del Departamento de Economía de la Universidad Loyola.

The COVID19 pandemic has had a strong economic impact on the different productive sectors.. However, the effects have been very unevenly distributed. Some industries, most notably those related to tourism, suffered the most, whereas some others were only marginally affected, or even experienced some expansion. Focusing on the regional economy of Andalusia, this study employs a computable general equilibrium model, to investigate the structural adjustment process, triggered by the sudden drop in tourism demand, generated by the mobility restrictions introduced in 2020. The model highlights how variations in relative prices could have allowed the agricultural sector to partly compensate the macroeconomic shock, in particular by absorbing some of the additional unemployment.

Reducing of food waste has become a policy priority in recent years as many studies show that a significant amount of food is wasted in different stages of food supply chain. However, the economic impacts of food waste reduction are not well studied as most of the studies in the literature ignore the costs and feedback effects. The aim of this report is to develop a general framework to analyse the economic impacts of reducing food waste in EU28 both in a global and a regional context, to support the EU policy making process on food waste reduction. For the purposes of this study, we employ the CGEBox toolbox which is a flexible, extendable and modular code basis for CGE modelling. The default configuration of CGEBox that is used in this study covers the global economy with a detailed representation of agriculture and food production sector whereas the EU28 is modelled at NUTS-II level. We simulate food waste reduction in food processing sectors under two different cost assumptions. First, by assuming that the cost of reducing food waste is equal to the monetary savings for the food processing industry; and second, by assuming that the cost of reducing food waste is twice as much as the savings from food waste. The scenarios assume a food waste reduction that is equal to 5% of the intermediate input use of food processing sectors. The results suggest that a unilateral commitment of the EU to reduce food loss and waste would most likely decrease the competitiveness of the EU food processing. Reduced demand for primary agricultural inputs would shrink the EU’s agricultural sectors, pressuring on farm incomes and land prices. The contribution to global food security would be very minor. The impact on emissions relevant for climate change at global level is also minor, with some very limited contribution inside the EU., JRC.D.4-Economics of Agriculture

In this paper we consider some of the economic implications of climate change scenarios as described in the Shared Socioeconomic Pathways (SSPs). By comparing potential water demand with estimates of (sustainable) water availability in different regions, we identify regions that are likely to be constrained in their future economic growth potential by the scarcity of water resources. We assess the macroeconomic impact of water scarcity under alternative allocation rules finding that, by assigning more water to sectors in which it has a higher value, shifting production to less water intensive sectors, and importing more water intensive goods, constrained regions can effectively neutralize these water related climate risks and adapt to a changing water environment. However, this adaptation effort is likely to imply some radical changes in water management policies.

In this paper we consider some of the economic implications of climate change scenarios as described in the Shared Socioeconomic Pathways (SSPs). By comparing potential water demand with estimates of (sustainable) water availability in different regions, we identify regions that are likely to be constrained in their future economic growth potential by the scarcity of water resources. We assess the macroeconomic impact of water scarcity under alternative allocation rules finding that, by assigning more water to sectors in which it has a higher value, shifting production to less water intensive sectors, and importing more water intensive goods, constrained regions can effectively neutralize these water related climate risks and adapt to a changing water environment. However, this adaptation effort is likely to imply some radical changes in water management policies.

We use a global, computable general equilibrium model to estimate how idiosyncratic, independent shocks to sectoral productivity could bring about variations to real income in a country. Some theories have been elaborated to explain why relatively small sectoral shocks could lead to sizable macroeconomic variability. We process the results of our simula- tion experiments to assess the relative importance of a number of potential explanations, as well as of other factors not accounted for in theoretical models. We find that the variability of the GDP, induced by sectoral shocks, is basically determined by the degree of industrial concentration. We interpret the absence of significant inter-industry propagation effects as a consequence of the fact that, typically, a non-negligible share of in- termediate production factors is imported.

This paper analyzes the qualitative properties of a multisectoral, multiregional computable general equilibrium model where some industries include heterogeneous firms as in Melitz (2003). The model, formulated according to Roson and Oyamada (2014), adds endogenous productivity effects to a standard Walras-Ricardian framework. We argue that the inclusion of such effects changes the magnitude and distribution of welfare benefits obtainable by reductions in trade barriers, due to of comparative advantages. We illustrate the point through a numerical example, in which alternative model formulations are assessed. A standard neoclassic GE model, a basic Melitz model and a hybrid model are then compared. The three model versions are all calibrated with the same data set and an identical simulation experiment (a 50% reduction of transport costs between two regions) is carried out in the three cases. The results show that the hybrid model displays the largest welfare gains, as it combines Ricardian comparative advantages with Melitz average productivity improvements. However, they also show that new effects, not present in the original Ricardo and Melitz frameworks, are at a work.

Human-generated greenhouse gases depend on the level of economic activity. Therefore, most climate change studies are based on models and scenarios of economic growth. Economic growth itself, however, is likely to be affected by climate change impacts. These impacts affect the economy in multiple and complex ways: changes in productivity, resource endowments, production and consumption patterns. We use a new dynamic, multi-regional Computable General Equilibrium (CGE) model of the world economy to answer the following questions: Will climate change impacts significantly affect growth and wealth distribution in the world? Should forecasts of human-induced greenhouse gases emissions be revised, once climate change impacts are taken into account? We found that, even though economic growth and emission paths do not change significantly at the global level, relevant differences exist at the regional and sectoral level. In particular, developing countries appear to suffer the most from climate change impacts.

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.

This paper presents an empirical study of energy demand, in which demand for a series of energy goods (Gas, Oil Products, Coal, Electricity) is expressed as a function of various factors, including temperature. Parameter values are estimated econometrically, using a dynamic panel data approach. Unlike previous studies in this field, the data sample has a global coverage, and special emphasis is given to the dynamic nature of demand, as well as to interactions between income levels and sensitivity to temperature variations. These features make the model results especially valuable in the analysis of climate change impacts. Results are interpreted in terms of derived demand for heating and cooling. Non-linearities and discontinuities emerge, making it necessary to distinguish between different countries, seasons, and energy sources. Short- and long-run temperature elasticities of demand are estimated.

Future energy demand will be affected by changes in prices and income, but also by other factors, like temperature levels. This paper draws upon an econometric study, disentangling the contribution of temperature in the determination of the annual regional demand for energy goods. Combining estimates of temperature elasticities with scenarios of future climate change, it is possible to assess variations in energy demand induced (directly) by the global warming. We use this information to simulate a change in the demand structure of households in a CGE model of the world economy, in a set of assessment exercises. The changing demand structure triggers a structural adjustment process, influencing trade flows, regional competitiveness of industries and regions, and welfare. We also consider the possible existence of imperfect competition in the energy markets, analyzing the impact of changes in energy demand with an alternative model version, in which energy industries are modeled as Cournot oligopolies.

Climate change impacts on human life have well defined and different origins, nevertheless in the determination of their final effects, especially those involving social-economic responses, interactions among impacts are likely to play an important role. This paper is one of the first attempts to disentangle and highlight the role of these interactions. It focuses on the economic assessment of two specific climate change impacts: sea-level rise and changes in tourism flows. By using a CGE model the two impacts categories are first analyzed separately and then jointly. Comparing the results it is shown that, even though qualitatively joint effects follow the outcomes of the disjoint exercises, quantitatively impact interactions do play a significant role. Moreover it has been also possible to disentangle the relative contribution of each single impact category to the final result. In the case under scrutiny demand shocks induced by changes in tourism flows outweigh the supply side shock induced by the loss of coastal land.

This paper considers the technical aspects and the consequences, in terms of simulation results and policy assessment, of introducing imperfect competition in a CGE model. The modifications to the standard CGE framework needed to model imperfect competition in some industries are briefly discussed. Next, the paper discusses whether, how much and why, those changes may affect the qualitative output of a typical simulation experiment. It is argued that technical choices made in designing the model structure may have a significant impact on the model behavior. This is especially evident when the output of the model, under an imperfect competition closure, is compared with that obtained under a standard closure, assuming perfect competition. As an illustration, a scenario of agricultural trade liberalization under alternative market structures is analyzed.

This commentary critically reviews a recent paper by Baraldi (2004). It shows that results obtained there are not robust, and may mot hold after the introduction of minor changes in the model structure. It is claimed that this is not a technical point, but relates to the fundamental nature of markets with indirect externalities.

We use a general equilibrium model of the world economy, and a regional economic growth model, to assess the economic implications of vulnerability from extreme meteorological events, induced by the climate change. In particular, we first consider the impact of climate change on ENSO and NAO oceanic oscillations and, subsequently, the implied variation on regional expected damages. We found that expected damages from extreme events are increasing in the United States, Europe and Russia, and Russia, and decreasing in energy exporting countries. Two economic implications are taken into account: (1) short-term impacts, due to changes in the demand structure, generated by higher/lower precautionary saving, and (2) variations in regional economic growth paths. We found that indirect short-term effects (variations in savings due to higher or lower likelihood of natural disasters) can have an impact on regional economics, whose order of magnitude is comparable to the one of direct damages. On the other hand, we highlight that higher vulnerability from extreme events translates into higher volatility in the economic growth path, and vice versa.

We study the economic impacts of climate-change-induced change in human health, viz. cardiovascular and respiratory disorders, diarrhoea, malaria, dengue fever and schistosomiasis. Changes in morbidity and mortality are interpreted as changes in labour productivity and demand for health care, and used to shock the GTAP-E computable general equilibrium model, calibrated for the year 2050. GDP, welfare and investment fall (rise) in regions with net negative (positive) health impacts. Prices, production, and terms of trade show a mixed pattern. Direct cost estimates, common in climate change impact studies, underestimate the true welfare losses.

A model of two-sided market (for credit cards) is introduced and discussed. In this model, agents can join none, one, or more than one platform (multihoming), depending on access prices and the choices made by agents on the opposite market side. Although emerging multihoming patterns are, clearly, one aspect of equilibrium in a two-sided market, this issue has not yet been thoroughly addressed in the literature. This paper provides a general theoretical framework, in which homing partitions are conceived as one aspect of market equilibrium, rather than being set ex-ante, through ad-hoc assumptions. The emergence of a specific equilibrium partition is a consequence of: (1) the structure of costs and benefits, (2) the degree and type of heterogeneity among agents, (3) the intensity of platform competition.

This paper studies the economic implications of climate-change-induced variations in tourism demand, using a world CGE model. The model is first re-calibrated at some future years, obtaining hypothetical benchmark equilibria, which are subsequently perturbed by shocks, simulating the effects of climate change. We portray the impact of climate change on tourism by means of two sets of shocks, occurring simultaneously. The first shocks translate predicted variations in tourist flows into changes of consumption preferences for domestically produced goods. The second shocks reallocate income across world regions, simulating the effect of higher or lower tourists' expenditure. Our analysis highlights that variations in tourist flows will affect regional economies in a way that is directly related to the sign and magnitude of flow variations. At a global scale, climate change will ultimately lead to a welfare loss, unevenly spread across regions.

The economy-wide implications of sea level rise in 2050 are estimated using a static computable general equilibrium model. Overall, general equilibrium effects increase the costs of sea level rise, but not necessarily in every sector or region. In the absence of coastal protection, economies that rely most on agriculture are hit hardest. Although energy is substituted for land, overall energy consumption falls with the shrinking economy, hurting energy exporters. With full coastal protection, GDP increases, particularly in regions that do a lot of dike building, but utility falls, least in regions that build a lot of dikes and export energy. Energy prices rise and energy consumption falls. The costs of full protection exceed the costs of losing land.

International trade negotiations have recently tackled the issue of possible free trade restrictions, justified - among others - on the basis of environmental concerns. Also, some analyses of international environmental agreements (especially in the field of climate change) have highlighted the key role played by changes in the terms of trade in determining the cost of environmental policies. Yet, secondary effects of international trade remain disregarded in many environmental policies, whereas the introduction of environmental trade barriers has been resisted, arguing that this may hide a Trojan horse of a renewed protectionism. This paper reviews the debate on trade and the environment in the two fields of environmental and trade negotiations, highlighting the different and somewhat conflicting approach adopted in the two cases. A numerical general equilibrium model is used to illustrate how different

A dynamic general equilibrium model of the Italian economy is used to assess the impact of carbon taxation (or auctioned carbon permits), where additional revenue is used to cut either existing taxes on labour or on capital income. Simulation results do not support the existence of the so-called "double dividend" when labour taxes are reduced, whereas lower tax rates on capital have mild positive effects on growth and welfare, with progressivity properties on income distribution. These findings hinge on the assumptions of open economy, given world interest rate, and capital mobility.

The carbon emissions abatement, undertaken by some countries, may induce other countries to increase their own emissions. This effect, known as "carbon leakage", may be due to rather different mechanisms. The simplest case is when outside countries do not change their environmental policies and world prices are fixed. Unilateral policies may then induce a substitution of domestic production, generating emissions, with imports.This paper analyses the carbon leakage generated under the "small open economy" assumption, illustrating some findings through a numerical, dynamic, general equilibrium model of the Italian economy. The analysis highlights two main points. First, in a general equilibrium setting, the carbon leakage depends on both the substitution and income effects. Income effects, in turn, crucially depend on how carbon tax revenues are recycled, or pollution rights rents are assigned. Different recycling schemes have rather different impacts on the national income and on the trade-induced leakage. Second, carbon leakage may be significantly affected by the degree of capital mobility in international markets, because capital services enter the balance of trade. Capital outflows amount to exports of capital services, possibly financing the import of carbon-intensive goods. This result suggests that, in a world of increasingly integrated financial markets, unilateral environmental policies are becoming less effective, because of the existence of policy spill-overs.

Markets for transport are often characterised by unequal demand in both directions: every morning during peak hours the trains are crowded while moving towards the direction of large cities, whereas they may be almost empty in the other direction. In this paper we discuss the implications of these imbalances for price setting of transport firms. From the viewpoint of economic theory, two regimes can be distinguished: one where -owing to price discrimination- the flows are equal, and one where unequal flows are the result. Special attention is paid to the case where the transport firm does not apply price discrimination, as is the case in most railway firms in Europe. We find that in the case of substantial joint costs, the introduction of price discrimination not only leads to an increase of profits, but also to positive effects on consumer surplus. This result differs from the standard result in the literature on industrial economics. The standard result purports that with linear demand functions price discrimination has a negative impact on the welfare of the average consumer and that this negative impact dominates the positive effect on profits of the producer.

This paper analyses some of the economic issues involved in the diffusion of modern intermodal technologies and the impact of intermodality on the functions performed by nodes in transportation networks. Two simple economic models are presented: the first considers why an intermodal transport service may be chosen instead of traditional single modal services, while the second addresses the link between standardisation and warehousing. The last section focuses, in a less abstract and more detailed way, on the maritime transport sector. The aim is to find evidence for the effects highlighted by the models.

An integrated assessment model is used to simulate the introduction of various emissions trading schemes based on the Kyoto protocol on the reduction of greenhouse emissions. The implications of the various systems in terms of income distribution are illustrated, and it is claimed that the issue of equity should not be regarded as independent of the issue of market efficiency. In particular, in this paper it is shown that (1) changes produced on an equity index by the imposition of emission constraints (by country) are not significantly higher than those obtained by the subsequent introduction of a market mechanism, and (2) that the different market regimes which could be adopted have quite different distributional implications. These results are interpreted as a direct consequence of the fact that a competitive market equilibrium is equivalent to a centralised social welfare maximisation in which the function to be maximised, however, normally differs from the social function used to define equity objectives.