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This paper analyzes the effectiveness of agriculture-led versus non-agriculture-led development strategies under climate-induced economic uncertainty. Utilizing Malawi as a case study, we introduce the application of Stochastic Dominance (SD) analysis, a tool from decision analysis theory, and compare the two strategies in the context of weather/climate-associated economic uncertainty. Our findings suggest that an agriculture-led development strategy consistently surpasses its non-agriculture-led antagonist in poverty and undernourishment outcomes across almost all possible weather/climate scenarios. This underscores that, despite increasing exposure of the entire economy to weather/climate uncertainty, agriculture-led development remains the optimal strategy for Malawi to reduce poverty and undernourishment. The study also endorses the broader use of SD analysis in policy planning studies, promoting its potential to integrate risk and uncertainty into policymaking. [ABSTRACT FROM AUTHOR]

When ranking big data observations such as colleges in the United States, diverse consumers reveal heterogeneous preferences. The objective of this paper is to sort out a linear ordering for these observations and to recommend strategies to improve their relative positions in the ranking. A properly sorted solution could help consumers make the right choices, and governments make wise policy decisions. Previous researchers have applied exogenous weighting or multivariate regression approaches to sort big data objects, ignoring their variety and variability. By recognizing the diversity and heterogeneity among both the observations and the consumers, we instead apply endogenous weighting to these contradictory revealed preferences. The outcome is a consistent steady-state solution to the counterbalance equilibrium within these contradictions. The solution takes into consideration the spillover effects of multiple-step interactions among the observations. When information from data is efficiently revealed in preferences, the revealed preferences greatly reduce the volume of the required data in the sorting process. The employed approach can be applied in many other areas, such as sports team ranking, academic journal ranking, voting, and real effective exchange rates. [ABSTRACT FROM AUTHOR]

Background: The energy reform from 2008 promotes the generation and use of renewable energy. Methods: The aim of this work is to evaluate the effectiveness of an environmental policy which promotes the replacement of fossil fuels with renewable energy through tax policy, using a general equilibrium model. Results: Results show that the efficacy of an environmental policy depends on the elasticity of substitution existing in the economy. Conclusions: It is crucial to invest in research and in the development of technology that promotes technological change and fosters greater use of renewable energy, particularly in the most polluting productive sectors in Mexico. It also shows that it is necessary to accelerate energy transition, using clean energy sources as part of the policies and strategies to mitigate greenhouse gases.

We simulate a 10‐period overlapping generations model with aggregate shocks to price safe and risky government obligations using consumption‐asset pricing. Agents cannot trade with future generations to hedge the model's productivity and depreciation shocks, and can only invest in one‐period bonds and risky capital. We find that the pricing of short‐ and long‐dated riskless obligations is anchored to the prevailing risk‐free return. The prices of obligations whose values are proportional to the prevailing wage are essentially identical to those of safe obligations, notwithstanding large macro shocks. On the contrary, government obligations in the form of options entail significant risk adjustment. [ABSTRACT FROM AUTHOR]

In this study, we estimate the cost of PM2.5 and O3 pollution in China and explore how it differs by province. For the analysis, we extend the China Regional Energy Model—a computable general equilibrium model of the Chinese economy—to explicitly represent the pollution-health linkage within a larger economic system. Our results show that health damage from air pollution in China is substantially large. For each year between 2010 and 2030, China's welfare loss from excess pollution is estimated to be 3.2–5.1% of the baseline level when welfare is measured as the sum of consumption and leisure. The PM2.5 share of the costs was > 13 times as large as the O3 share, and premature deaths from chronic exposure to PM2.5 were the single most important health endpoint, accounting for ≤ 56% of the total costs. Cross-regional heterogeneity is substantial, and populous and wealthy Eastern China is subject to particularly large health damage. When the size of provincial economies is controlled for, however, the dominance of the eastern region is less obvious and several inland provinces (e.g., Henan, Shanxi, and Chongqing) also suffer high pollution-health costs, due to low air quality and fast productivity growth. Finally, broader economic loss from inefficient resource allocation and its cumulative effects, which is often neglected in static analysis, accounts for > 29% of the total costs. Overlooking this cost component will, in particular, lead to substantial underestimation for China's central and western regions, whose economies are growing fast. [ABSTRACT FROM AUTHOR]

This paper demonstrates the importance of modelling energy-intensive household services in general, and private transportation in particular, as combinations of energy and other inputs. Initially a partial equilibrium approach is used to analyse private transport consumption as a self-produced commodity formed by household vehicle and fuel use. We particularly focus on the impact of private vehicle-augmenting technical progress in this framework. We show that household fuel use will fall if it is easier to substitute between vehicles and fuel in the household production of private transport services than it is to substitute between private transport and the composite of all other goods in overall household consumption. The analysis is then extended, through Computable General Equilibrium simulation, to investigate the wider implications of similar efficiency improvements when intermediate demand, prices and nominal income are endogenous. The subsequent reduction in the price of private transport service (not observable in market prices) allows the wage measured relative to the CPI to rise whilst the wage relative to the price of foreign goods falls. This simultaneously increases UK international competitiveness, encouraging increased exports and reduced import penetration whilst allowing employment to rise. This provides an additional supply-side stimulus to production, employment and household income. [ABSTRACT FROM AUTHOR]

The energy markets are characterized by many agents simultaneously solving decision problems under uncertainty. It is argued that Monte Carlo simulations are not an adequate way to assess behavioral uncertainty; one should rather rely on stochastic modelling. Drawing on economics, decision theory and operations research, a simple guide on how to transform a deterministic energy market equilibrium model - where several agents simultaneously make decisions - into a stochastic equilibrium model is offered. With our approach, no programming of a stochastic solution algorithm is required. [ABSTRACT FROM AUTHOR]

This article provides additional evidence that factor contents of different consumers’ consumption bundles computed from multiple households closed Computable General Equilibrium (CGE) models are approximately proportional. This empirical regularity has been observed up to now for a total of 11 CGEs for very diverse countries, and we therefore state it as law. It implies that these models display price rigidity with respect to endowment re-allocations, an observation which has broad implications for their capacity to capture general equilibrium effects. [ABSTRACT FROM PUBLISHER]

The objective of this paper is to study $$\hbox {CO}_{2}$$ taxation in its dual role as a climate and fiscal policy instrument using a dynamic general equilibrium model of the Portuguese economy which highlights the mechanisms of endogenous growth and incorporates a detailed modeling of public sector behavior and accounts. In addition to the conventional marginal abatement cost curve, we present a pair of complementary marginal abatement cost curves which highlight the impact $$\hbox {CO}_{2}$$ taxation has on economic performance and public debt and are therefore directly relevant to the terms of the policy debate. These marginal abatement cost curves provide an effective tool for understanding the rate at which the environmental effectiveness, economic costs, and budgetary effects change with the tax level. Our results indicate that $$\hbox {CO}_{2}$$ taxes can be an important policy instrument for reducing emissions and promoting fiscal consolidation, although this will come at a cost in terms of economic performance. Simulation results suggest that a tax of 17.00 Euros per $$\hbox {tCO}_{2}$$ can satisfy existing climate policy targets. The tax revenue effects, together with reductions in public spending, yield a 4.8 % reduction in public debt. These desirable outcomes come at the cost of a 1.3 % reduction in GDP over the long term. Our analysis highlights that limiting public consumption expenditures can contribute to larger reductions in public debt, albeit at a marginally greater cost to economic activity. In turn, reducing public investment, although effective in reducing public debt, produces a much larger negative economic impact. This evokes an important trade-off, particularly pronounced in the present debates regarding austerity measures in the EU, between fiscal consolidation efforts and efforts to promote convergence to EU standards of living. These results further highlight that modeling assumptions with respect to public spending decision are not innocuous. An exogenous trajectory for public spending suggests substantially smaller GDP effects and substantially larger public debt effects for any given emissions target. [ABSTRACT FROM AUTHOR]

With climate change endangering environmental sustainability, and food–biofuel competition still looming large, the pursuit of Sustainable Development Goals (SDG) requires balancing this trade-off. By highlighting the role of current-vintage agro-fuel technology in combating twin crisis, we calibrate a 23 regions-24 sectors Computable General Equilibrium (CGE) model to enumerate the impacts of: [i] 10% biotechnological invention in maize grains, rice and wheat; [ii] productivity growth in new agro-chemical inputs; [iii] impact of next generation biofuel technology (5% productivity shock). The results confirm that investing in factors for adoption of third-generation biofuels could be significant policy response for mitigating the adverse impacts. [ABSTRACT FROM AUTHOR]

We develop a Financial Computable General Equilibrium (FCGE) model that analyzes the economic impacts of infrastructure investment projects and their financing options on growth and distribution in the Indonesian economy. The FCGE model integrates the real economy with the financial one within a unified economic system, and traces the flows of financial and real resources among economic agents. The model is designed to analyze the economic effects of fiscal policies such as the transportation investment expenditures and alternative procurement approaches on economic growth and distribution among socio-economic classes, linking the investment expenditures with specific financial resources. It is possible to estimate growth and distributional effects of each project based on the financing method over the construction and the operation and maintenance periods once the information on the investment expenditures, the construction location and the changes in the accessibility generated by the project are injected into the FCGE model. The simulations on the Indonesian transportation projects reveal that the government financing with tax revenues could generate higher effects on GDP than other financing methods. [ABSTRACT FROM AUTHOR]

A theory of economic equilibrium for incomplete financial markets in general real assets is developed in a new formulation with currency-denominated prices. The 'goods' are not only commodities, and they can influence utility through retention as an alternative to consumption. Perfect foresight is relinquished in a rolling horizon approach to markets which lets agents pursue long-term interests without being sure of future prices. The framework is that of an economy operating in a fiat currency that agents find attractive to retain, in balance with other needs. The attractiveness comes from Keynesian considerations about uncertainty which until now have not been brought in. The existence of equilibrium is established directly-not just generically-and moreover under weaker assumptions on endowments than before, except that utility functions are taken to be concave. Agents do not need to start out with, or end up with, positive amounts of everything. With a single currency denominating the units of account in all states, price indeterminacy is avoided and all contracts issued in the financial markets can be interpreted as 'real contracts.' Derivative instruments and collateralized contracts based on money prices are thereby encompassed for the first time. Transaction costs on sales of contracts, generated endogenously, lead to bid-ask spreads and in particular to a gap between interest rates for lending and borrowing money. [ABSTRACT FROM AUTHOR]

In this paper the impacts of oil price fluctuations on the household welfare for different income groups have been studied using computational general equilibrium model. Equivalent Variation (EV) criterion is also used to evaluate changes in household welfare. The results show that oil price fluctuation has a greater impact on income, expenditure and welfare of urban households compared with the rural ones. In other words, dependence of urban household income on oil price is stronger in comparison to the rural ones. It has also been revealed that an oil price increase is more effective than the price reduction on household welfare, income and expenditure. Ratio of EV to total expenditure is almost the same for the poor and rich households, implying that both of them suffer a percentage of welfare loss in the same way.

Withdrawing energy subsidies has inevitably welfare effects on the Iranian economy. The estimation of this effect can help policy-makers and planners to take the right decisions. In this paper, welfare effects of cash transfer are calculated for electrical energy subsidies using a social accounting matrix and the computable general equilibrium model. In order to evaluate the welfare effect of this policy, GDP index has also been implemented. Three scenarios of prices, cash payment of subsidies and model simulation are considered in this regard. The research findings reveal that as a result of these policies, GDP will dramatically decrease and the economy will fall into a recession. If the cash payments are financed through the following three methods; a) surplus government revenues, b) sales tax on electricity commodity, c) income tax, combined with price increasing policy, will cause a deeper recession and a lower rate of GDP as a result. This trend has a negative and reverse relation with the amount of cash payment subsidies and electrical energy price. Also, the rate of change will heavily depend on the sort of financial resources for such subsidies, as with an increase in cash subsidies and electricity prices, the result would be decreased level of GDP over time.

This paper develops a modelling framework that links GEMINI-E3, a multi-regional, multi-sectoral computable general equilibrium model with a cost-benefit analysis approach at local level using geographical information system tools to assess the physical and economic consequences of sea-level rise (SLR) in the twenty first century. A set of future scenarios is developed spanning the uncertainties related to global warming, the parameters of semi-empirical SLR estimates, and coastal developments (cropland, urban areas and population). The importance of incorporating uncertainties regarding coastal development is highlighted. The simulation results suggest that the potential development of future coastal areas is a greater source of uncertainty than the parameters of SLR itself in terms of the economic consequences of SLR. At global level, the economic impact of SLR could be significant when loss of productive land along with loss of capital and forced displacement of populations are considered. Furthermore, highly urbanised and densely populated coastal areas of South East Asia, Australia and New Zealand are likely to suffer significantly if no protective measures are taken. Hence, it is suggested that coastal areas needs to be protected to ameliorate the overall welfare cost across various regions. [ABSTRACT FROM AUTHOR]

Immigration is often seen as an instrument of adaptation for ageing countries. In this paper, we evaluate, using a dynamic general equilibrium model, the contribution of migration policy in reducing the tax burden associated with the ageing population in France. Four alternative scenarios, compared with a baseline scenario based on official projections, are simulated with the aim of quantifying the effects of immigration on French social protection finances. We show that the age and, to a lesser extent, the skill structure of immigrants are the key features that mainly determine the effects on social protection finances. Overall, these effects are all the more positive in the short to medium term if the migration policy is selective (in favour of more skilled workers). In the long term, the beneficial effects of a selective policy may disappear. But whatever the degree of selectivity of the migration policy, the financial gains from higher consequent migration flows are relatively moderate compared with the demographic changes implied by ageing. [ABSTRACT FROM AUTHOR]

The point of departure for the study of the impact of energy and environmental policies is the neo-classical theory of economic growth formulated by Cass (1965) and Koopmans (1967). The long-run properties of economic growth models are independent of energy and environmental policies. However, these policies affect capital accumulation and rates of productivity growth that determine the intermediate-run trends that are important for policy evaluation. Heterogeneity of different energy producers and consumers is critical for the implementation of energy and environmental policies. To capture this heterogeneity it is necessary to distinguish among commodities, industries, and households. Econometric methods are essential for summarizing information on different industries and consumer groups in a form suitable for general equilibrium modeling. In this paper we consider the application of econometric general equilibrium modeling to the U.S., the economy that has been studied most intensively. The framework for our analysis is provided by the Intertemporal General Equilibrium Model (IGEM) introduced by Jorgenson and Wilcoxen (1990). The new version of the IGEM presented in this paper is employed for the evaluation of proposed legislation on climate policy by the U.S. Environmental Protection Agency (2011). [ABSTRACT FROM AUTHOR]

Is it possible to combat global climate change through North-to-South technology transfer even without a global climate treaty? Or do carbon leakage and the rebound effect imply that it is possible to take advantage of technological improvements under the umbrella of a global arrangement only? For answering these questions two possible states of the world are discussed: one, where more energy efficient technologies are transferred unconditionally from the North to the South, and where regions do not cooperate in the solution of the global climate problem but unilaterally decide on climate policies and technology transfers; one, where the North-to-South technology transfer is tied to the requirement that the South in some way contributes to the solution of the global climate problem. Rebound and leakage effects hinder a sustainable and welfare improving solution of the climate problem. [ABSTRACT FROM AUTHOR]

The paper presents the newly developed dynamic spatial general equilibrium model of European Commission, RHOMOLO, and proposes its future extensions. The model incorporates several elements from economic geography in a novel and theoretically consistent way. It describes the location choice of different types of agents and captures the interplay between agglomeration and dispersion forces in determining the spatial equilibrium. The model is also dynamic as it allows for the accumulation of factors of production, human capital and technology. This makes RHOMOLO particularly suited for simulating policy scenario related to the EU cohesion policy and for the analysis of its impact on the regions and the Member States of the union. [ABSTRACT FROM AUTHOR]

Recognising human capital's central role in economic development, many countries in the Asia Pacific region have allocated significant resources to the development of their education sectors. However, despite growing policy concern over acute mismatches between qualification supply and qualification demand, few of these countries have national systems for generating and disseminating employment forecasts. In this paper, we outline a forecasting method that is parsimonious in its data requirements, making it suitable for the often data-constrained research environments of the Asia Pacific's developing economies. We apply the method to Vietnam, a rapidly growing transition economy. The method generates detailed labour market projections, while also making transparent the underlying macroeconomic, structural and policy shocks that determine the forecasts. A decomposition of forecast outcomes in terms of the individual contributions of these shocks facilitates transparency in forecasting, by clearly distinguishing and ranking factors responsible for generating each forecast outcome. [ABSTRACT FROM PUBLISHER]

Impact assessment of transportation investment policy is a challenging task as assessment outcome is sensitive to various attributes such as methodology, time period, scale and location of analysis. This study is conducted to evaluate regional impact of public transportation infrastructure in the USA at multilevel geographic scales. The assessment is implemented using a spatial econometric computable general equilibrium approach which integrates spatial econometric techniques with computable general equilibrium models to control for spatial spillover effects. The results found that regional economic impacts of public transportation infrastructure vary substantially by mode and geographic scale. The US highway infrastructure tends to have consistent and dominant impacts on both the US national and regional economy across different geographic scales. The impact of public airport infrastructure tends to be much larger at the national level than state and metropolitan level, whereas the economic contribution of public transit including passenger rail infrastructure tends to be much stronger at the US northeast metro level than the national level of analysis. [ABSTRACT FROM AUTHOR]

ComputationandSimulationhave always played a role in economics – whether it be pure economic theory or any variant of applied, especially policy-oriented, macro- and microeconomics or what has increasingly come to be called empirical or experimental economics. Computations and simulations are also intrinsically dynamic. This triptych – computation, simulation and dynamic – is given natural foundations, mainly as a result of developments in the mathematics underpinnings in the potentials of computing, using digital technology. A running theme in this essay is the recognition that, increasingly, the development of economic theory seems to go hand in hand with advances in the theory and practice of computing, which is, in turn, a catalyst for the move away from too much reliance on any kind of mathematics for the formalisation of economic entities that is inconsistent with the mathematical, methodological and epistemological foundations of the theory of computation. [ABSTRACT FROM AUTHOR]