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General Equilibrium Effects of Green Technological Progress

General Equilibrium Effects of Green Technological Progress

3 Concluding remarks In this paper, we have deliberately employed a very simple general equilibrium model of resource extractions in the presence of a backstop technology. We have shown that tech- nological progress has an income e¤ect which may not lead to resource-saving behavior. We also expect that similar results may arise when considering other e¤ects, for example the e¤ects of taxing resource uses. We do not claim the universal dominance of our e¤ect, but we would like to advise that general equilibrium e¤ects may lead to unwarranted side-e¤ects. Of course, our results certainly rely on our assumption that production must be equal to consumption in each period. If we think of the composite factor as capital and allow investment, intertemporal consumption patterns could be smoothed. However, it seems that the interest rate e¤ect could still be present. Furthermore, if investment aug- ments the capital stock, it will make the marginal product of resource inputs increase and potentially add another extraction-increasing e¤ect. In any case, it seems to us that the assumption of a constant interest rate may ignore important general equilibrium e¤ects if the problem at hand is of signi…cance.
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Household Incidence of Pollution Control Policies: a Robust Welfare Analysis Using General Equilibrium Effects

Household Incidence of Pollution Control Policies: a Robust Welfare Analysis Using General Equilibrium Effects

The increases in energy prices affect negatively energy-intensive industries through a cost-push shock that puts an upward pressure on the prices of their products. Still, in a general equilibrium context, this negative supply shock should not necessarily translate into an increase in the prices of energy-intensive goods because of the potential negative effects on demand also initiated by the energy price increase. For, as shown in Table 3, as energy prices rise, returns to labor and capital could fall, and household real income could thereby drop. This is particular true in the UCS where these factors do not benefit from any positive measure from revenue recycling. Labour and capital remunerations fall by respectively 0.69 % and 1.46% under UCS. In the RPT scenario, the rental rate of capital decreases by 1.69% while the wage rate increase thanks to the reduction in payroll taxes. Under OBA, both factors benefit from the output subsidy and their remunerations increase slightly.
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Education and Poverty in Vietnam: a Computable General Equilibrium Analysis

Education and Poverty in Vietnam: a Computable General Equilibrium Analysis

In order to capture the general equilibrium effects on income distribution of changes in education policies in Vietnam, we develop a static CGE model that incorporates all three above-mentioned elements. Household education investment decisions are modeled in detail. The model accounts for direct and opportunity costs of education as well as public spending on education. It renders household endowments of skilled and unskilled workers endogenous in the spirit of human capital theory. A simulation is run in order to analyze the impacts of a reduction in public spending on education on the Vietnamese economy and, in particular, on poverty. In a more general manner, we aim to reach a better global understanding of the link between public spending in education and poverty in order to be able to learn lessons transferable to other countries. Furthermore, through the innovative integration of education in this model, this paper contributes to poverty and income distribution analysis.
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Trade Reform and Poverty in the Philippines: a Computable General Equilibrium Microsimulation Analysis

Trade Reform and Poverty in the Philippines: a Computable General Equilibrium Microsimulation Analysis

General equilibrium micro-simulation analyses utilizing true data are presented in the papers of Tongeren (1994), Cogneau (1999), Cogneau and Robillard (2000), and Cockburn (2001). Tongeren models individual firms, rather than the individual households. Cogneau's analysis focuses on a particular city, Antananarivo, rather than a nation, and on issues concerning primarily labor market. In Cogneau and Robillard, the impact of various growth shocks, such as increases in total factor productivity, on poverty and income distribution is examined in the context of a national model of Madagascar. In particular, they find that "although mean income and price changes are significant, the impact of the various growth shocks on the total indicators of poverty and inequality appears relatively small". They also show that neglect of general equilibrium effects, as in standard micro-simulations, and the assumption of a fixed intra-group income distribution, as in standard CGE models, both create a strong bias in the results. However, the disaggregation of the household account in their model is obtained at the cost of sectoral disaggregation of production. Their model distinguishes only five factors of production and three sectors. As the poverty and income distribution effects of macroeconomic shocks are mediated primarily by differences in household income and consumption patterns, this level of aggregation fails to capture many of the intra-household differences.
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Migration Impact on Moroccan Unemployment : a Static Computable General Equilibrium Analysis

Migration Impact on Moroccan Unemployment : a Static Computable General Equilibrium Analysis

The very few works that try to encircle in a systematic way the impact of migration on labour market are limited to the effect of international migration on unemployment in developing countries. However, it is common to find that labour mobility is observed in several directions. For example, a transitory South- South migration, from a developing country towards another before migrating to a developed country, can coexist with internal migration from rural to urban ar- eas, or emigration to more developed countries. The combination of these forces is able to exert unexpected effects on the labour market, and in order to under- stand them and study their consequences, we choose the Moroccan case. Indeed, Morocco seems the typical example of a developing country undergoing the com- bination of different migratory flows: rural and urban emigration towards the European Union, internal migration from rural to urban areas, and finally Sub- Saharan immigration to Morocco for transit towards Europe or in order to stay there definitely.
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Peak Oil through the lens of a general equilibrium assessment

Peak Oil through the lens of a general equilibrium assessment

7 a steady decline of production over time, along with an exponential growth of prices (see Krautkraemer (1998) for a review), and fail to represent a peak of oil production. This is because they assume that agents behave with perfect foresight, and hence, perfectly anticipate future scarcity of the exhaustible resource. A notable exception is given by Holland (2008) who demonstrates that a peak of production may occur with this framework if forces that increase the equilibrium production counterbalance the decreasing trend imposed by the depletion effect. 2 Actually, most approaches predicting Peak Oil rely on partial equilibrium analysis of recursive market adjustments between oil supply and oil demand, with no consideration of the feedback of oil markets on economic growth (see Fattouh (2007) for a review).
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Real indeterminacy and dynamics of asset price bubbles in general equilibrium

Real indeterminacy and dynamics of asset price bubbles in general equilibrium

Our third contribution is to clarify the relationship between the existence of bub- ble, equilibrium indeterminacy and (individual) welfare. The equilibrium indeterminacy in our model is global, and no local approximation is invoked to prove this indeterminacy. Our proof relies on the fact that asset prices, in some cases, can be recursively computed. Hence the sequence of prices can be computed as a function of the initial price. Therefore, at the initial date, any value can be an equilibrium price if it is low enough so that the price and the bubble component will be not too high in the future, ensuring that agents can buy them. As a result, there may be a continuum of asset prices and a continuum of equilibrium trajectories. Notice that we require neither the convergence of these trajectories nor the existence of a steady-state. So, the indeterminacy in our model is quite different from the concept of dynamic indeterminacy in macroeconomics (see Benhabib and Farmer ( 1999 ), Farmer ( 2019 ) for surveys on this issue). Our result on indeterminacy complements the findings in Kehoe and Levine ( 1985 ), Kehoe et al. ( 1990 ) who show that in a general equilibrium model with a finite number of infinitely lived consumers and with complete financial markets, equilibria are generically determinate. 9 Unlike
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No-arbitrage and Equilibrium in Finite Dimension: A General Result

No-arbitrage and Equilibrium in Finite Dimension: A General Result

1 Introduction The literature on the existence of an equilibrium on financial asset markets is very huge. Because short-sales are allowed, the consumption set is not bounded any more from below. As a consequence, unbounded and mutually compatible arbitrage opportunities can arise. In such cases, prices at which all arbitrage opportunities can be exhausted may fail to exist, and thus, equilibrium may fail to exist. The literature focuses on conditions which ensure the compactness of the individually rational feasible allocations set or of the individually rational utility set. These conditions are known as no-arbitrage conditions. We can classify them in three categories:
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Second best analysis in a general equilibrium climate change model

Second best analysis in a general equilibrium climate change model

The objective of this paper is to propose a methodological framework in order to per- form second-best analysis in a general equilibrium climate change model. More precisely, we focus on the study of the set of equilibria in the decentralized economy. The main difficulty of this approach lies in the way the research activity is modeled, in particular the type of innovation goods which are developed as well as their pricing. In the standard endogenous growth theory (Aghion and Howitt, 1998; Romer, 1990...), when an innovation is produced, it is associated with a particular intermediate good. However, the more often, embodying knowledge into intermediate goods becomes inextricable in more general com- putable endogenous growth models with pollution and/or natural resources. In addition, those technical difficulties are emphasized when dealing with several research sectors, i.e. when there are several types of specific knowledge, each of them being dedicated to a par- ticular input (resource, labor, capital, backstop...) as it is proposed in Acemoglu (2002). To circumvent those obstacles, we assume that the pieces of knowledge are directly priced (see for instance Grimaud and Rougé, 2008). We compute the social and the market values of an innovation and we suppose that the policy-maker can reduce the gap between these two values owing to dedicated R&D subsidies.
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A theory of spatial general equilibrium in a fuzzy economy

A theory of spatial general equilibrium in a fuzzy economy

space ä la Lösch (scattered demand and supply). At last, it covers, as a particular case, the model of a classical aspatial economy (demand and supply concentrated in a single point). 4.2. However, this result is possible only when space is characterized in a poor manner. It has been described with the help of a set of points which are separated by given distances and all the prices, including the transportation prices, are settled in competitive markets. A richer characterization of space would start notable difficulties. We find again the idea that space is not economically neutral and its integration in the general equilibrium theory put specific problems (Mougeot, 1978).
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Agricultural Trade Liberalization, Productivity Gain and Poverty Alleviation: a General Equilibrium Analysis

Agricultural Trade Liberalization, Productivity Gain and Poverty Alleviation: a General Equilibrium Analysis

The main features that distinguish this paper from earlier CGE analyses of trade liberalization and poverty is that international trade is allowed to endogenously enhance agricultural productivity through technology transfer. The study incorporates econometric evidence of these trade-productivity linkages into a general equilibrium model to capture the additional poverty reduction that could be expected from the ongoing growth effects of agricultural trade reform. The CGE model we use takes also into account the complexity of the labor market and explores the interaction between labor productivity and the wage rate determination. Our approach involves a two-step procedure. First, we sketch a conceptual framework for exploring the role of international trade in promoting technology transfer from more advanced trading partners of Tunisia and in enhancing agricultural productivity growth. For this purpose, we compute agricultural total factor productivity (TFP) indexes for Tunisia and its main trading partners. We use panel data for 14 countries involved in the EU-Mediterranean partnership and estimate a latent class stochastic frontier model to account for cross country heterogeneity in production technologies. We evaluate the contribution of international trade to productivity growth through the speed of technology transfer using the distance from the technological frontier to capture the potential for technology transfer. Second, we incorporate econometric evidence of the productivity effects into a CGE model to arrive at a comprehensive evaluation of alternative trade liberalization scenarios on commodity prices and factor prices, as a basis for then calculating the corresponding impact on households’ income, poverty and inequality.
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Optimal Justice in a General Equilibrium Model with Non Observable Individual Productivities

Optimal Justice in a General Equilibrium Model with Non Observable Individual Productivities

In this general equilibrium model, justice and police institutions are treated as a mechanism that induces individuals to extend some desirable productive effort. This determines individual encroachment activities which in turn determine the proportion of aggregate production that fails to be appropriated, and the private incentives to choose productive activities. Since individuals have different productive abilities society would ideally take both equity and efficiency into consideration in the design of its institutions: encroachment is a form of redistribution from the most talented individuals to the least talented ones. We study the stylized properties that should arise when individual productivities are not observable by the system, and when both detection levels and justice accurary are costly instruments.
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Trade liberalization and poverty reduction in Africa: computable general equilibrium models approach. Literature review

Trade liberalization and poverty reduction in Africa: computable general equilibrium models approach. Literature review

In the studies reviewed in this paper are marked differences and conflicting results about the effects of international trade on welfare, income distribution and poverty reduction in sub-Saharan African countries (Annex 1). There is no clear effect of trade liberalization on poverty at national level, while generally speaking, poverty falls more in urban than in rural areas, where, in many cases, even rises. There seems to be some evidence of negative effects among rural and poorest population in the short term while it seems to revert in the long term. Inequality remains the same or slightly increases in most of cases. Additionally, income distribution worsens more when reductions on export tariffs are applied.
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Migrations and economics development : a computable general equilibrium approach of the maroccan case

Migrations and economics development : a computable general equilibrium approach of the maroccan case

behaviour of labour market as well as the internal and external determinants of migratory flows. Very briefly, my version of this model contains 34 mono-productive sectors distributed between two aggregate sectors: a rural one (agriculture and fishing) and an urban one (industry, tradable and non-tradable services); five agents (rural and urban households, firms, government, and the RoW). I further modify the specification of the rural sector in order to distinguish, within this sector, between subsistence and industrial agriculture. The production process employs two production factors: labour and capital. Because of the relative complementarity of capital and labour in the public value added, it is now represented by a Leontief function, on the contrary to the CES function of private value added. The capital is sector-specific. Rural labour is a bundle of rural professional categories and each rural labour category is perfectly mobile between rural sectors. Urban labour is also a bundle of urban categories with each one being mobile between urban sectors, but sub-segments of urban market are imperfect due to the existence of unemployment. In addition, I endogenise the labour supply on each sub-segment of rural and urban markets. I further assume that unemployed persons can not change their profession. In other words, the cross elasticity of labour supply is null. Finally, I introduce a new block of equations, relative to rural and urban emigration, internal migration from rural to urban areas and Sub-Saharan immigration, and I suppose the existence of migration costs. The model has an investment-driven closure: total investment volume is fixed. Households and firms’ savings are determined by the model and foreign savings are fixed. Uniform adjustments of the value added tax rate across all sectors assure that government savings vary endogenously to achieve savings- investment equilibrium 9 .
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PEP-1-1 : The PEP standard, computable general equilibrium model, single-country, static version

PEP-1-1 : The PEP standard, computable general equilibrium model, single-country, static version

INTRODUCTION This paper proposes a static computable general equilibrium (CGE) model designed for the study of a national economy. This CGE model is intended to be an operational tool for PEP Network researchers and other users, so we hope. With it, they will be able to develop a relatively standard model, and easily apply it to their country, whatever the particular structure of their social accounting matrix (SAM). The present model differs significantly from Decaluwé, Martens and Savard’s (2001) EXTER model, which has been used extensively in the past by network researchers who had been trained in one of the many modeling « Schools » held over the years in many parts of the world. In many respects, the PEP-1-1 model is richer than the more pedagogical EXTER. First, the PEP-1-1 model distinguishes several categories of workers and of capital. Also, PEP-1-1 is capable of taking into account a broader set of tax instruments, and it models all possible transfers between institutions (agents). Finally, the GAMS code, presented in a separate document, has been written in a general form, thanks to the use of sets. This will facilitate the application of PEP-1-1 to variously aggregated SAMs, by means of a few simple steps to make the SAM directly readable into the GAMS program. We are currently working on extensions of the PEP-1-1 model, to guide researchers in building dynamic or multi-country world models 5 .
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A Multi-Scale Spatial General Equilibrium Model Applied to the USA and France

A Multi-Scale Spatial General Equilibrium Model Applied to the USA and France

Kelejian and Prucha, 2010 ) 33 theoretically base their knowledge of unobservable innovations upon the knowledge of W. When facing endogeneity problems in non-autoregressive specifica- tions and resorting to, e.g. Kelejian and Prucha (1999 )’s generalized moments estimator (GM), the definition of the exogeneity constrains heavily relies on W, which yields consistent and ef- ficient estimations for sure, but potentially not with respect to the true DGP. If resorting to the instrumental variables (IV) method – in which space is conceived as providing ideal instru- ments ( Das et al., 2003 ; Lee, 2003 ; Pinkse and Slade, 2010 ) –, the strength of instruments is far from being ensured with W in its most common specification, i.e. whose lag consists of neighbors-averaging. Moreover, as discussed by Gibbons and Overman (2012 ), the inclusion of the product of higher powers of the spatial lag operator in the set of instruments is very likely to lead to a problem of colinearity, which in turn leads to the weaknesses of both identification and instruments. Finally, when computing LeSage and Pace (2009 )’s total direct and indirect effects, the correctness of the true derivative of the regressand with respect to any spatially filtered 34 variable is a direct result of the correctness of W.
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Agricultural surplus, division of labour and the emergence of cities. A spatial general equilibrium model

Agricultural surplus, division of labour and the emergence of cities. A spatial general equilibrium model

5 Conclusion In this paper, we propose a spatial general equilibrium model of cities’ formation in which the source of agglomeration is the division of labour in the manufacturing sector, while two constraints limit this effect: the subsistence constraint and the urban employment constraint. Four types of equilibrium are highlighted: when the agricultural productivity is insufficient or the subsistence threshold too high, it is possible that no city emerge and the economy does not produce manufacturing goods. However, in many cases, a city can exist. If the two urban subsectors are not saturated, all agents enjoy the same level of welfare and no persistent migratory pressure exists at the equilibrium. On the contrary, if one or both sub-sectors are saturated, utility levels diverge and rural-urban and/or intra-urban inequalities appear. This kind of situations cannot be solved unless some technological progress in the manufacturing sector allows to relax the migratory pressure. Indeed, a deepening in the division of labour would permit to increase urban employment and therefore to go back to an interior equilibrium. If the economy is in a corner equilibrium, a decrease in transport costs may increase the rural- urban welfare gap and therefore aggravate the possible conflicts between urban workers and farmers.
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General equilibrium impact of an energy-saving policy in the public sector

General equilibrium impact of an energy-saving policy in the public sector

1. Introduction The largest part of the literature on macroeconomic effects of environmental policies deals with ecological tax reforms – the so-called "double dividend" debate (Bosello et al., 2001). However taxes are far from being the most common policy instrument for protecting the environment. Therefore a few recent papers, e.g., Goulder et al. (1999) also analyse emissions quotas, performance standards and mandated technologies. Another instrument worth looking at is the composition of public spending between environmental-friendly and unfriendly goods and services. Indeed, government procurement expenditures account for 9 to 25% of GDP in OECD countries (OECD, 2000). Admittedly, Bovenberg and van der Ploeg (1994) analyse the optimal composition of public spending between a clean and a dirty good, but both are produced with the same production technology.
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A General Equilibrium Analysis of the Evolution of the Canadian Service Productivity

A General Equilibrium Analysis of the Evolution of the Canadian Service Productivity

In practice, the capital constraint in the non-business sector is never binding at reasonable rates of capacity utilization, and hence its shadow price is zero1. For notational simplicit[r]

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Agglomeration economics, trade, and a system of cities : a general equilibrium approach

Agglomeration economics, trade, and a system of cities : a general equilibrium approach

Although further migration into the large cities may eventually slow down as the countries approch "lower level equilibrium points" in city size distributions, [r]

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