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Article
Publication date: 23 September 2022

Saurabh Sharma, Ipsita Padhi and Sarat Dhal

This paper aims to revisit the theme of fiscal-monetary coordination in a general equilibrium setup that allows for unconventional monetary policy, monetary policy…

Abstract

Purpose

This paper aims to revisit the theme of fiscal-monetary coordination in a general equilibrium setup that allows for unconventional monetary policy, monetary policy transmission and developing country characteristics.

Design/methodology/approach

This paper uses a calibrated new Keynesian dynamic stochastic general equilibrium (DSGE) model to study fiscal-monetary interaction.

Findings

Debt sits at the center of monetary-fiscal interaction. Under high-debt conditions, the inflation-output trade-off rises with an increase in the strictness with which monetary policy targets inflation, undermining the standard prescription of strict inflation targeting. At the same time, the transmission of monetary policy is also impeded, due to which unconventional monetary policy becomes more appropriate. The need for coordination among the policies gets enhanced in the presence of borrowing cost channel. While the presence of borrowing cost channel increases the need for policy coordination regardless of the debt situation, features like higher share of non-Ricardian households and weaker monetary policy transmission affect monetary-fiscal interaction to a greater extent under high-debt environment.

Originality/value

First, this paper uses inflation-output trade-off as a metric, to analyze fiscal-monetary interaction. Second, this paper considers the impact of developing country characteristics (such as a higher share of non-Ricardian households, impeded monetary policy transmission and supply constraints/borrowing cost channel) on fiscal-monetary interaction. Third, the DSGE model developed in this paper incorporates open market operations that could shed light on the role of unconventional monetary policy in the presence of high fiscal deficit and debt, which is particularly relevant in the current context of the COVID-19 pandemic. Fourth, the model also permits an investigation into monetary policy transmission under different debt regimes.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

Keywords

Book part
Publication date: 15 July 2017

Farzad Taheripour and Wallace E. Tyner

The purpose of this chapter is to ask and answer the question of what would happen if Genetically Modified Organism (GMO) plant materials were banned. We report on two…

Abstract

The purpose of this chapter is to ask and answer the question of what would happen if Genetically Modified Organism (GMO) plant materials were banned. We report on two studies – one with United States only ban and one with a global ban. We used a global computable general equilibrium (CGE) model, Global Trade Analysis Project (GTAP), for the analysis. This model has been used in hundreds of published papers on trade, energy, land use, and environmental issues. Our use of the model was to estimate the crop yield benefits for the major GMO crops, and then to convert this to a loss if the GMO traits were banned. We then shocked the GTAP model with the yield losses and estimate economic, land use, and greenhouse gas (GHG) emission impacts. We found that losing the GM technology would cause commodity and food prices to increase and also bring about a significant increase in GHG emissions. The increase in emissions is caused by the need to convert forest and pasture to compensate for the lost production. Another interesting conclusion of the global ban study is that economic well-being for the United States, the world’s largest GMO user, actually increases with a ban. Many regions that ban or use little GMO varieties like the European Union, India, China, and Japan all see economic well-being decrease. These counterintuitive results are driven mainly by trade patterns. Therefore GMO technology helps agriculture reduce its carbon footprint. Without this technology, agricultural land-use GHG emissions increase as do food prices. Some groups would like to see GMOs banned and also see GHG emissions fall. You cannot have it both ways.

Details

World Agricultural Resources and Food Security
Type: Book
ISBN: 978-1-78714-515-3

Keywords

Book part
Publication date: 1 June 2022

Roberto Roson and Camille Van der Vorst

This survey presents the recent and rapidly expanding literature, which analyses the economic impacts of the COVID-19 pandemic, by means of Computable General Equilibrium…

Abstract

This survey presents the recent and rapidly expanding literature, which analyses the economic impacts of the COVID-19 pandemic, by means of Computable General Equilibrium (CGE) modelling. It does so not only by contrasting and assessing the different methodological approaches, and the key findings of the simulation exercises, but also by putting the various contributions in a historical perspective. This is necessary because each CGE-based study should be evaluated while keeping in mind when it was realised, since questions, priorities, expectations have been constantly changing during the spreading of the pandemic.

Article
Publication date: 4 December 2017

Athula Naranpanawa and Jayatilleke Bandara

There is a large body of literature on the link between trade liberalisation, growth and poverty. However, less attention has been paid to the relationship between trade…

Abstract

Purpose

There is a large body of literature on the link between trade liberalisation, growth and poverty. However, less attention has been paid to the relationship between trade and regional disparities. The purpose of this paper is to identify and quantify the regional impacts of trade liberalisation, particularly in the war-affected regions and to understand to what extent trade reforms can contribute to the post-war recovery process and long-term economic and political stability in Sri Lanka.

Design/methodology/approach

The authors developed a single country multi-regional computable general equilibrium (CGE) model for the Sri Lankan economy to meet the need for a detailed country study as emphasised in the recent literature.

Findings

Both short-run and long-run results suggest that all regions including war-affected regions in the country gain from trade liberalisation, although gains are uneven across regions. Furthermore, the results suggest that war-affected regions gain more relative to some other regions in the long run.

Originality/value

According to the best of the authors’ knowledge within country regional impact of trade liberalisation using a multi-regional CGE model has never been attempted for Sri Lanka. The results of this study, even though based on Sri Lankan data, will be relevant to other developing countries engulfed in internal conflicts with regional economic disparities.

Details

International Journal of Social Economics, vol. 44 no. 12
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 5 May 2015

Don Gunasekera, Yiyong Cai and David Newth

The purpose of this paper is to review the key issues surrounding foreign direct investment (FDI) in agriculture, and examine the potential impacts of FDI in African…

2394

Abstract

Purpose

The purpose of this paper is to review the key issues surrounding foreign direct investment (FDI) in agriculture, and examine the potential impacts of FDI in African agriculture.

Design/methodology/approach

The dynamic Global Trade Analysis Project model (GDyn) is used to analyse the potential impacts of improvements in land productivity and FDI in Africa.

Findings

The results illustrate that combined efforts to improve land productivity and growth in FDI could potentially increase Africa’s share in global agricultural output and exports, particularly with respect to oil seeds, sugar, and cotton.

Originality/value

The authors employ a global economy-wide modelling framework to simulate the effects of growth in FDI in African agriculture.

Details

China Agricultural Economic Review, vol. 7 no. 2
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 19 June 2017

Gabriela Ortiz Valverde and Maria C. Latorre

The purpose of this paper is as follows: first, it aims to explain the overall economic implications of the trans-pacific partnership (TPP). Second, it aims to provide an…

Abstract

Purpose

The purpose of this paper is as follows: first, it aims to explain the overall economic implications of the trans-pacific partnership (TPP). Second, it aims to provide an in-depth analysis of the TPP’s quantitative impact on an upper-middle economy such as Mexico, as well as on the USA.

Design/methodology/approach

The analysis is performed using a computable general equilibrium (CGE) model.

Findings

The results suggest that in the short run, both Mexico and the USA would slightly benefit from the TPP. Tariff reductions would lead to less bilateral trade between Mexico and the USA and the stronger integration of both countries with the rest of the TPP members. The opposite is true after a decrease in non-tariff barriers (NTBs). Overall, in terms of the impact on Mexico, trade integration with the rest of the TPP members prevails. This suggests that a TPP without the USA could still be beneficial.

Originality/value

Previous studies on the TPP have mainly focused on its impact for the USA, which is also analysed in the present study. The effects of the TPP are estimated for a broad set of micro and macroeconomic variables, paying particular attention to the reductions of NTBs.

Details

Journal of International Trade Law and Policy, vol. 16 no. 2
Type: Research Article
ISSN: 1477-0024

Keywords

Book part
Publication date: 24 September 2010

David C. Finnoff and Arthur J. Caplan

We present a computable general equilibrium model of the interface between the Great Salt Lake (GSL) ecosystem and both the international and regional economy that impacts…

Abstract

We present a computable general equilibrium model of the interface between the Great Salt Lake (GSL) ecosystem and both the international and regional economy that impacts the ecosystem. International trade is accounted for in the simplest of terms, involving the export of each of the ecosystem's main commodities and importation of a composite good, as well as equilibrium balances in the savings-investment and current accounts. With respect to the ecosystem, the model treats the various representative species as net energy maximizers and bases population dynamics on the period-by-period sizes of surplus net energy. Energy markets – where predators and prey exchange biomass – determine equilibrium energy prices. With respect to the regional economy, we model five production sectors (at the aggregate industry level) – brine cyst harvesters, the mineral-extraction industry, agriculture, recreation, and a composite-good industry – as well as the household sector. By performing dynamic simulations of the joint ecosystem–regional economy model, we isolate the effects of period-by-period stochastic changes in salinity levels and an initial shock to species-population levels on the ecological and economic variables of the model.

Details

New Developments in Computable General Equilibrium Analysis for Trade Policy
Type: Book
ISBN: 978-0-85724-142-9

Keywords

Book part
Publication date: 13 December 2013

Bryan S. Graham

I show that the equilibrium distribution of matches associated with the empirical transferable utility one-to-one matching (TUM) model introduced by Choo and Siow (2006a

Abstract

I show that the equilibrium distribution of matches associated with the empirical transferable utility one-to-one matching (TUM) model introduced by Choo and Siow (2006a, 2006b) corresponds to the fixed point of system of K + L nonlinear equations; with K and L respectively equal to the number of discrete types of women and men. I use this representation to derive new comparative static results, showing how the match distribution varies with match surplus and the marginal distributions of agent types.

Article
Publication date: 13 November 2018

Aldi M. Hutagalung, Djoni Hartono, Maarten J. Arentsen and Jon C. Lovett

The purpose of the paper is to provide to a better scientific understanding of Indonesia’s domestic gas allocation policy and its effects on the national economy and to…

Abstract

Purpose

The purpose of the paper is to provide to a better scientific understanding of Indonesia’s domestic gas allocation policy and its effects on the national economy and to answer the question of what best priorities can be set in allocating the natural gas for the domestic market to maximize the benefits for the national economy.

Design/methodology/approach

The authors apply a Computabled General Equilibrium (CGE). The Social Accounting Matrix 2008 is used to calibrate the CGE Model. There are two scenarios proposed, each is simulated with certain percentage of gas supply curtailment (50 MMSCFD, Scenario A), (100 MMSCFD, Scenario B).

Findings

It is confirmed that government’s current policy to give priority to oil production is not the optimum way to maximize added value of natural gas to Indonesian economy. While oil production generates state revenue, it is industry and petrochemical sector that induces high economic impacts because of strong backward and forward linkages.

Research limitations/implications

Due to the limited data availability, it is assumed that the data on the SAM 2008 are valid for describing the structure of Indonesian economy.

Practical implications

The paper provides recommendation to the government to revise gas allocation policy by changing the rank of consumers’ priority.

Originality/value

This paper provides instruments to measure the impact of Indonesia’s domestic gas allocation policy. Finding the best hierarchy of consumer priorities is essential for maximizing added value of natural gas for the national economy.

Details

International Journal of Energy Sector Management, vol. 13 no. 2
Type: Research Article
ISSN: 1750-6220

Keywords

Article
Publication date: 1 April 1996

MARC DASSESSE

The purpose of the present paper is not to review the rules applicable whenever a member state wishes, in a straightforward manner, to grant financial aid to a credit…

Abstract

The purpose of the present paper is not to review the rules applicable whenever a member state wishes, in a straightforward manner, to grant financial aid to a credit institution which has run into difficulties. Its ambition is, instead, to draw attention to the impact of European Community law whenever a credit institution loans money to, or underwrites bonds issued by, a client which benefits from irregular state aid.

Details

Journal of Financial Regulation and Compliance, vol. 4 no. 4
Type: Research Article
ISSN: 1358-1988

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