Factor Markets in General Computable Equilibrium Models
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Global Applied General Equilibrium Analysis Using the GTAP Framework
Global Applied General Equilibrium Analysis using the GTAP Framework by Thomas W. Hertel1 Contributed Chapter for the Handbook of Computable General Equilibrium Modeling, Peter B. Dixon and Dale W. Jorgenson (eds) Elsvier Publishers GTAP Working Paper No. 66 2012 1 Distinguished Professor and Executive Director, Center for Global Trade Analysis, Purdue University, 563 Krannert Building, West Lafayette, IN 47907-1145. Email: [email protected] . The author acknowledges valuable comments from Amer Ahmed, Antoine Bouët, Peter Dixon, Joseph Francois, Kenichi Kawasaki, Robert Koopman, Sebastien Jean, Patrick Jomini, David Laborde, Sergey Paltsev, John Reilly, Sally Thompson, Marinos Tsigas and Terrie Walmsley. GLOBAL APPLIED GENERAL EQUILIBRIUM ANALYSIS USING THE GTAP FRAMEWORK Abstract Handbook of Computable General Equilibrium Modeling This chapter provides an overview of the first two decades of the Global Trade Analysis Project (GTAP) – an effort to support a standardized data base and CGE modeling platform for international economic analysis. It characterizes GTAP in four different dimensions: institutional innovation, a network, a database and a standardized modeling platform. Guiding principles for the GTAP modeling framework include flexibility, ease of use, transparency, and symmetric treatment of production and utility fundamentals across regions. The chapter reviews core modeling assumptions relating to the regional household, private consumption behavior, welfare decomposition, the “global bank”, treatment of the international trade and transport sector, and imports. Model validation and sensitivity analysis, as well as software issues receive attention as well. The chapter also offers brief overviews of the two major areas of application: international economic integration and global environmental issues. It closes with a discussion of future directions for the Project. -
Market Failures and Misallocation
Market Failures and Misallocation Ajay Shenoy∗ University of California, Santa Cruz March 16, 2017 First Version: April 28, 2011 Abstract I develop a method to measure and separate the production misalloca- tion caused by failures in factor markets versus financial markets. When I apply the method to rice farming villages in Thailand I find surprisingly lit- tle misallocation. Optimal reallocation would increase output by less than 19 percent. By 2007 most misallocation comes from factor market failures. I derive a decomposition of aggregate growth that accounts for misalloca- tion. Declining misallocation contributes little to growth compared to fac- tor accumulation and rising farm productivity. I use a government credit intervention to test my measures. I confirm that credit causes a statistically significant decrease in financial market misallocation, but has no effect on factor market misallocation. (JEL O47, O16, E13) ∗Postal Address: Rm. E2-455, University of California, M/S Economics Department, 1156 High Street, Santa Cruz CA, 95064; Email: [email protected] 2 AJAY SHENOY 1 Introduction The average farm worker in the most advanced countries produces 44 times as much output as one in the least (Gollin, Lagakos, and Waugh, 2014a,b). The sheer size of this gap has led some researchers to propose that an underproduc- tive farm sector may explain late industrialization and economic underdevel- opment (Gollin, Parente, and Rogerson, 2002, 2007). Farming in poor countries may be unproductive for many reasons, but one of the best documented is that markets for inputs, credit, and insurance are dysfunctional. As a result the land, labor, and capital used in production may be misallocated across farmers. -
Factor Markets in Applied Equilibrium Models
No. 23, February 2012 Lindsay Shutes, Andrea Rothe and Martin Banse Factor Markets in Applied Equilibrium Models The current state and planned extensions towards an improved presentation of factor markets in agriculture ABSTRACT This paper describes how factor markets are presented in applied equilibrium models and how we plan to improve and to extend the presentation of factor markets in two specific models: MAGNET and ESIM. We do not argue that partial equilibrium models should become more ‘general’ in the sense of integrating all factor markets, but that the shift of agricultural income policies to decoupled payments linked to land in the EU necessitates the inclusion of land markets in policy-relevant modelling tools. To this end, this paper outlines options to integrate land markets in partial equilibrium models. A special feature of general equilibrium models is the inclusion of fully integrated factor markets in the system of equations to describe the functionality of a single country or a group of countries. Thus, this paper focuses on the implementation and improved representation of agricultural factor markets (land, labour and capital) in computable general equilibrium (CGE) models. This paper outlines the presentation of factor markets with an overview of currently applied CGE models and describes selected options to improve and extend the current factor market modelling in the MAGNET model, which also uses the results and empirical findings of our partners in this FP project. FACTOR MARKETS Working Papers present work being conducted within the FACTOR MARKETS research project, which analyses and compares the functioning of factor markets for agriculture in the member states, candidate countries and the EU as a whole, with a view to stimulating reactions from other experts in the field. -
A Test of the Economic Base Hypothesis in the Small Forest Communities of Southeast Alaska
United States Department of Agriculture A Test of the Economic Base Forest Service Hypothesis in the Small Forest Pacific Northwest Research Station General Technical Communities of Southeast Alaska Report PNW-GTR-592 Guy C. Robertson December 2003 Author Guy C. Robertson was a forest economist, U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station, Forestry Sciences Laboratory, 3200 SW Jefferson Way, Corvallis, OR 97331. Robertson is now a policy analyst, U.S. Department of Agriculture, Forest Service, Policy Analysis, 201 14th Street SW, Washington, DC 20024. Abstract Robertson, Guy C. 2003. A test of the economic base hypothesis in the small forest communities of southeast Alaska. Gen. Tech. Rep. PNW-GTR-592. Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station. 101 p. Recent harvest declines in the Western United States have focused attention on the question of economic impacts at the community level. The impact of changing timber-related economic activity in a given community on other local activity and the general economic health of the community at large has been a persistent and often contentious issue in debates surrounding forest policy decisions. The eco- nomic base hypothesis, in which changes in local export-related economic activ- ity are assumed to cause changes in economic activity serving local demand, is a common framework for understanding impacts of forest policy decisions and forms the basis of models commonly used to provide estimates of expected local impacts under different policy options. This study uses community-specific, time-series employment data to test the economic base hypothesis in the small, semi-isolated communities of southeast Alaska. -
I Introduction
I INTRODUCTION CoPS/Impact undertakes: • applied economic research mainly in the area of economic modelling; • consultancies in Australia and other countries mainly involving the creation and application of economic models; • publication of books, reports and articles documenting its research; and • teaching of applied economics to advanced undergraduates and the supervision of post-graduate research students. After a brief history of CoPS/Impact, this report describes the activities of the unit for 1997 and the first half of 1998. The report covers: research activities; staff and graduate students; the GEMPACK software; training courses; publications; the weekly workshop; and the unitÕs finances. History The Impact Project started in 1975 as part of the Industry Assistance Commission (now the Productivity Commission). In 1978 Impact moved to the University of Melbourne and in 1991 it moved to Monash. In 1993 it became part of the Centre of Policy Studies. Throughout this eighteen year period, the Project was directed by Professor Alan A. Powell and financed mainly by the Commonwealth government. The ProjectÕs principal achievements were the ORANI model of the Australian economy and the Gempack programs for the solution of economic models. ORANI was used extensively by government and business in Australia and was the subject of several hundred papers and reports. Versions of ORANI have been created for many countries. Gempack programs are used by economic research units in about fifty countries. It has had a profound effect on economic modelling by reducing computational difficulties and facilitating communication between modellers. A feature of Impact since its inception is openness. This includes complete public documentation of its research, and the provision of training programs in the use of economic models. -
Macroeconomics Theory and Policy | 3Rd Edition by B
MACROeconomics Theory and Policy | 3rd Edition by B. Modjtahedi Included in this preview: • Copyright Page • Table of Contents • Excerpt of Chapter 1 For additional information on adopting this book for your class, please contact us at 800.200.3908 x501 or via e-mail at [email protected] MACROECONOMICS Theory and Policy, 3rd Edition by B. Modjtahedi University of California, Davis Copyright © 2011 by University Readers, Inc. All rights reserved. No part of this publication may be reprinted, reproduced, transmitted, or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying, microfilming, and recording, or in any information retrieval system without the written permission of University Readers, Inc. First published in the United States of America in 2011 by Cognella, a division of University Readers, Inc. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. 15 14 13 12 11 1 2 3 4 5 Printed in the United States of America ISBN: 978-1-60927-010-0 CONTENTS PREFACE VII CHAPTER 7 143 The Goods and Services Market CHAPTER 1 1 CHAPTER 8 163 What Do Economists Do? We Model For Food The Money Market: Supply of Money CHAPTER 2 23 CHAPTER 9 185 Private Costs and benefi ts: Rational Economic Behavior The Money Market: Demand for Money CHAPTER 3 49 CHAPTER 10 205 Social Costs and benefi ts: Economic Effi ciency The Loanable Funds Market CHAPTER 4 67 CHAPTER 11 229 -
Conference Program
TM 18th Annual Conference on Global Economic Analysis “Information for the Policy Maker: Practical Economic Modelling for Tomorrow" Melbourne, Australia Melbourne Convention Centre June 17-19, 2015 Conference Organizers TM Premier Sponsor Principal Sponsor Conference Sponsors Table of Contents General Information ........................................................................................................................................................................................................ 1 Organizers ............................................................................................................................................................................................................................ 2 Sponsors................................................................................................................................................................................................................................ 3 Special Recognition .......................................................................................................................................................................................................... 4 Ken Pearson Scholarship ............................................................................................................................................................................................... 5 Ken Pearson Scholarship Recipients ....................................................................................................................................................................... -
Introduction to Microeconomics E201
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ INTRODUCTION TO MICROECONOMICS E201 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Dr. David A. Dilts Department of Economics, School of Business and Management Sciences Indiana - Purdue University - Fort Wayne $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ May 10, 1995 First Revision July 14, 1995 Second Revision May 5, 1996 Third Revision August 16, 1996 Fourth Revision May 15, 2003 Fifth Revision March 31, 2004 Sixth Revision July 7, 2004 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Introduction to Microeconomics, E201 8 Dr. David A. Dilts All rights reserved. No portion of this book may be reproduced, transmitted, or stored, by any process or technique, without the express written consent of Dr. David A. Dilts 1992, 1993, 1994, 1995 ,1996, 2003 and 2004 Published by Indiana - Purdue University - Fort Wayne for use in classes offered by the Department -
Economic Adjustment: Policies and Problems
Economic Adjustment: Policies and Problems ©International Monetary Fund. Not for Redistribution This page intentionally left blank ©International Monetary Fund. Not for Redistribution Economic Adjustment: Policies and Problems Edited by Sir Frank Holmes Papers presented at a seminar held in Wellington, New Zealand, February 17-19, 1986 International Monetary Fund • 1987 ©International Monetary Fund. Not for Redistribution © International Monetary Fund, 1987 Reprinted July 1989 Library of Congress Cataloging-in-Publication Data Economic adjustment: policies and problems: papers presented at a seminar held in Wellington, New Zealand, February 17-19, 1986 / edited by Sir Frank Holmes. p. cm. Bibliography: p. ISBN 0-939934-98-1 1. Oceania—Economic policy—Congresses. 2. Korea (South)— Economic policy—1960—Congresses. 3. New Zealand—Economic policy—Congresses. I. Holmes, Frank Wakefield, Sir, 1924— II. International Monetary Fund. HC681.E28 1986 87-30382 338.99-dcl9 CIP Price: $16.00 ©International Monetary Fund. Not for Redistribution Foreword Economic adjustment continues to be a major issue demanding the attention of the authorities of developed and developing countries alike. This volume, which contains the proceedings of a seminar held in 1986 in Wellington, New Zealand, focuses on the adjustment problems faced by countries in the South Pacific, and particular attention is devoted to the situation of the small island economies in the South Pacific. One of the most important aspects of adjustment for these countries, as well as for New Zealand and Australia, is the formulation of liberalized trade and exchange policies in the face of increasing worldwide protectionism, and a number of participants in the seminar addressed themselves to this issue. -
CGE Models……………………………………………….………....….21 Sample GAMS Code Excerpt from Simple CGE Model………………………………
SESSION 3 Theoretical Development of a Basic CGE model An Introductory Overview Source: Hans Lofgren course 1 Table of Contents What is a CGE model……………………………………………………………………………………...3 Brief History of CGE Modeling……………………………………………………………………..............5 What is A SAM………………………………………………………………………………………...........9 Stylized SAM……………………………………………………………………..…………...10 Figure. SAM Structure………………………………………………………………......….....12 Data Beyond the SAM……………………………………………………………………………...............13 Structure of Country CGE Model……………………………………………….………………...............14 Payment in Stylized Model………………………………………………………………........16 Figure. Production Technology………………………………………………………...............17 Figure. Commodity Flows…………………………………………………………..............…18 GAMS and Other Software for CGE Models……………………………………………….………....….21 Sample GAMS code excerpt from simple CGE model……………………………….......….23 Issues and Areas of Comparative (dis)advantage for CGE Models…………...…………………...............24 Resources on CGE Modeling and/or GAMS………………………………………………………….. …27 Selected References………………………………………………………………………………………28 2 What is a CGE model? • Computable → solvable numerically • General → economy-wide (all production, consumption, investment, and trade that is covered by the national accounts) • Equilibrium → – optimizing agents have found their best solutions subject to their budget constraints – quantities demanded = quantities supplied in factor and commodity markets – macroeconomic balance: receipts = spending for government, balance of payments, and savings-investment -
Unit 13 Factor Market and Pricing Decisions
UNIT 13 FACTOR MARKET AND PRICING DECISIONS Structure 13.0 Objectives 13.1 Introduction 13.2 Meaning of Factor Markets 13.3 Concepts of Demand and Supply of a Factor 13.3.1 Demand for Factor 13.3.2 Supply of Factor 13.4 Factor Pricing by Marginal Productivity Theory 13.5 Determination of Returns to a Factor 13.5.1 Rent 13.5.2 Wages 13.5.3 Interest 13.5.4 Profits 13.6 Role of Factor Prices in Pricing Decision of the Firm 13.7 Let Us Sum Up 13.8 References 13.9 Answers or Hints to Check Your Progress Exercises 13.0 OBJECTIVES After learning about the different market structures viz. Perfect Competition Monopoly, monopolistic competition and oligopoly in Unit 9 to 12 which explain the different equilibrium conditions of price and output in the product market, this unit introduces the concept of factor market i.e. the market for factors of production in an economy. This unit will develop your understanding about how factor markets operate distinctly from product markets, how pricing decisions take place in factor markets and how returns to factors of production are determined. After going through this unit, you will be able to: • state the concept of a factor market; • explain the demand and supply mechanisms in factor markets; • discuss marginal productivity theory of factor pricing; • articulate pricing decisions for a factor and; and • determine returns to factors of production viz. Wages, interest, rent and profit. Dr. Nausheen Nizami, Assistant Professor of Economics, Pt. Deen Dayal Upadhyay 279 Petrolium University, Ahmedabad. -
Land Communes and Factor Market Imperfections: Micro-Evidence from Late 19Th-Century Russia
Land Communes and Factor Market Imperfections: Micro-Evidence from Late 19th-Century Russia Steven Nafziger∗ October, 2005 Abstract Why was the Russian economy relatively backward before the Revolution? Alexander Gerschenkron and others have argued that the peasant land commune’s system of collective property rights and control over household resource decisions introduced frictions into factor markets. These features of the commune reduced the ability of households to exit agriculture, thus lowering the supply of labor to industry and economic growth. I employ newly collected archival data from a survey of rural households in 1899 to evaluate this argument. I show that households used a variety of factor adjustment mechanisms. These included the hiring of labor and the allocation of household labor to off-farm work. Households actively participated in land rental markets and were able to shift land between generations and within the community through the commune’s land allocation system. By looking at household mortality shocks, I measure the extent of factor adjustments and the degree to which households were able to respond through the various land and labor mechanisms. I show that household adjustments to mortality shocks came primarily through the labor market. I also find that the communal land allocation system was relatively efficient for adjusting land holdings. Even when it lagged in reallocating shares of the communal land, households could substitute by adjusting through labor and land rental markets. These findings suggest that distortions created by the commune in one market did not prevent households from making needed factor allocations through other means. This implies that communal limitations on labor mobility were less significant than Gerschenkron argued.