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Book part
Publication date: 1 January 2014

John Cockburn, Luc Savard and Luca Tiberti

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Handbook of Microsimulation Modelling
Type: Book
ISBN: 978-1-78350-570-8

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Handbook of Transport Geography and Spatial Systems
Type: Book
ISBN: 978-1-615-83253-8

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Article
Publication date: 1 October 2005

Luz Centeno Stenberg and Mahinda Siriwardana

The paper reviews recent developments in utilising computable general equilibrium (CGE) models to analyse forestry policies. The paper highlights the application of CGE

Abstract

Purpose

The paper reviews recent developments in utilising computable general equilibrium (CGE) models to analyse forestry policies. The paper highlights the application of CGE modelling to deforestation and forestry issues.

Design/methodology/approach

The analysis is carried out by comparing different CGE models available in the literature, which have analysed the economic consequences of deforestation and changes in forestry policies.

Findings

The use of CGE models in analysing forestry issues is still in its early stages. There is room for innovation and improvement in the various models used.

Practical implications

The paper emphasises the relevance of general equilibrium analysis in the evaluation of both micro‐ and macro‐economic policies on forestry. It encourages researchers to use general equilibrium analysis in their study of environmental problems.

Originality/value

The paper highlights the contribution and possible benefits of utilising CGE models in analysing environmental problems such as deforestation, especially in the context of environment‐economics trade‐off.

Details

Management of Environmental Quality: An International Journal, vol. 16 no. 5
Type: Research Article
ISSN: 1477-7835

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Article
Publication date: 7 June 2021

Elizabeth Louisa Roos and Philip David Adams

This paper aims to provide a quantitative assessment of the broad economic effects of tax policy reform in the Kingdom of Saudi Arabia (KSA).

Abstract

Purpose

This paper aims to provide a quantitative assessment of the broad economic effects of tax policy reform in the Kingdom of Saudi Arabia (KSA).

Design/methodology/approach

Using a dynamic computable general equilibrium (CGE) model of the KSA, three simulations are run. The first simulation is the baseline simulation, which generates growth paths of the Saudi economy in the absence of tax reform. In developing the baseline simulation, this study incorporates forecasts from the International Monetary Fund. The remaining simulations are policy simulations. A policy simulation deviates from the baseline simulation in response to a policy change. In the first policy simulation, this study introduces a value-added tax (VAT) that generates SAR 35bn. This study assumes budget neutrality with the additional tax revenue transferred to households via a lump sum payment. In the second policy simulation, this study introduces a corporate income tax that generates SAR 35bn. This study then calculates and compares the distortion these taxes introduce into the economy.

Findings

This study finds that although the introduction of new taxes increases government tax revenue, markets are distorted lowering efficiency and production. An introduction of VAT increases the cost of consumption relative to the cost of production. As a consequence, the real cost of labour increases lowering employment in the short run. Employment moves to the baseline, as wages adjust capital and real gross domestic product (GDP) is below base throughout the simulation period. The second simulation is an increase in the corporate tax rate with lowers the post-tax rates of return investors receive. This simulation shows that the negative impact on investment, capital and GDP is larger with the introduction of a corporate tax than with the VAT.

Research limitations/implications

Literature focusing on tax policy reform in the Gulf Cooperation Council and, specifically, Saudi Arabia is limited. This paper contributes to the literature by focusing on the following: understanding the impact and mechanisms through which changes in taxation impact the economy more generally; understanding the potential harm caused to allocative efficiency and production due to taxes; and ways in which fiscal reform might complement other reforms such as efforts to diversify the economy, labour market and energy price reforms. This improves the information base available to policymakers charged with designing an optimal tax system that meets all future requirements of a country such as the KSA.

Originality/value

The authors developed and applied a CGE model for the KSA to analyse the impact of VAT and corporate tax on the Saudi economy. To the best of the authors’ knowledge, there are no recent CGE models for Saudi Arabia that have been used for tax policy or quantifying the potential harm to the economy when new taxes are introduced.

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International Journal of Islamic and Middle Eastern Finance and Management, vol. 14 no. 4
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 27 April 2012

Abdykappar Ashimov, Bahyt Sultanov, Zheksenbek Adilov, Yuriy Borovskiy, Nikolay Borovskiy and Askar Ashimov

The purpose of this paper is to present some results of the development of parametrical regulation theory elements for computable general equilibrium models (CGE models)…

Abstract

Purpose

The purpose of this paper is to present some results of the development of parametrical regulation theory elements for computable general equilibrium models (CGE models), taking into consideration their peculiarities.

Design/methodology/approach

Theoretical results have been obtained by means of applying geometrical methods for variational problems and methods of the theory of discrete dynamic systems. These results have been used for solving concrete practical problems.

Findings

The authors proved a statement on the existence of solution for variational calculus problem on the choice of the optimal laws of parametrical regulation within the given finite set of algorithms for discrete dynamic systems. A statement has been proved on sufficient conditions for the existence of an extremal's bifurcation point of variational calculus problem on the choice of the optimum laws of parametrical regulation within the given finite set of algorithms for discrete dynamic systems. Optimal laws of parametrical regulation (on the level of one and two parameters) of economic system evolution on the basis of the examined mathematical model have been defined. The bifurcation line was constructed for the given area of uncontrolled parameter values.

Practical implications

The research results can be applied for the choice and realization of an effective state budget and tax policy.

Originality/value

The paper elaborates the elements of parametrical regulation theory of economic system development on the basis of CGE models and shows the effectiveness of parametrical regulation theory application on the example of one CGE model.

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Article
Publication date: 16 August 2019

Le Trung Ngoc Phat and Nguyen Kim Hanh

The purpose of this paper is to employ the computable general equilibrium (CGE) approach to examine how the European–Vietnam Free Trade Agreement (EVFTA) impacts on the…

Abstract

Purpose

The purpose of this paper is to employ the computable general equilibrium (CGE) approach to examine how the European–Vietnam Free Trade Agreement (EVFTA) impacts on the Vietnamese economy in the case of the removal of industrial tariffs.

Design/methodology/approach

The authors construct a social accounting matrix based on the latest data of the Vietnam input-output Table for the year 2012 and then apply the CGE model to simulate the economic scenarios when the tariff rate of the industrial sector reduces to 0 percent.

Findings

The first simulation results demonstrate that the elimination of tariffs in the industrial sector will lead to a 9.13 percent increase in household consumption, together with an increase in the factors of production of the agricultural, industrial and service sectors by 9.61, 9.74 and 8.21 percent, respectively. The EVFTA also causes a deficit in the trade balance because the value of imports increases by 12.54 percent, while exports’ value slightly increases by 2.71 percent. Furthermore, there has been a drop of 2.29 percent in the total government income; nevertheless, social welfare witnesses a gain of 9.13 percent. The second scenario simulation draws crucial attention to policymakers that a small fluctuation in the production tax rate will cause a significant change in the economy.

Practical implications

The reduction of tariff in the industrial sector will increase the social welfare and strengthen the whole economy regarding the growth of household consumption, factors of production and trade value. On the unfavorable side, the EVFTA causes a national budget deficit and puts pressure on domestic production. This paper is a valuable reference for governments and policymakers when they decide to reduce tariffs or adjust production taxes once Vietnam integrates into the world economy.

Originality/value

This study differs from previous research works by utilizing a static CGE model to investigate the impact of removing the industrial tariff on the economy under EVFTA.

Details

Journal of Economics and Development, vol. 21 no. 1
Type: Research Article
ISSN: 2632-5330

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Book part
Publication date: 24 September 2010

John Gilbert

John Gilbert is a professor of economics in the Department of Economics and Finance, Jon M. Huntsman School of Business, at Utah State University. He has worked as a…

Abstract

John Gilbert is a professor of economics in the Department of Economics and Finance, Jon M. Huntsman School of Business, at Utah State University. He has worked as a consultant for the World Bank, UNESCAP, ADBI, and the Peterson Institute for International Economics, and has published extensively in the area of trade theory and policy, and on the computable general equilibrium analysis of regional trading arrangements.

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

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Article
Publication date: 14 June 2018

Jae-whak Roh and Hyunjae Kim

During the Paris Convention, Korean Government made commitment to curb carbon emission by 37 percent by the year of 2030. Since then there has been constant debate, both…

Abstract

Purpose

During the Paris Convention, Korean Government made commitment to curb carbon emission by 37 percent by the year of 2030. Since then there has been constant debate, both in media and academia, as to whether attempts to reduce carbon emission would spell the concomitant economic slowdown. The purpose of this paper is to build a Computable General Equilibrium (CGE) model to see the effects of emission decrease on Korea economy.

Design/methodology/approach

To answer the above question, we build a comprehensive framework to gauge the economic impact of Paris Convention through the lens of Computable General Equilibrium (CGE) model using Armington and Melitz model.

Findings

Contrary to conventional wisdom, Korea’s economic performance in terms of welfare remains robust when the carbon emission is reduced. Broadly speaking, Korea’s welfare does not contract significantly in part due to expansion at the export market. For instance, the energy intensive industry (EIT) is affected most directly from the Paris Convention commitment and yet it experiences growth in export. On the contrary, the authors find that the general economic impact on Korea’s output is negative. The additional experiment using Melitz model shows that as the carbon reduction is enforced, both the number and the average productivity of the exporting firms increase in the EIT sector, which the authors refer in the paper as the “Melitz Effect.”

Practical implications

This paper shows that what can be occurred in Korean industries by emission decrease commitment.

Social implications

One byproduct from restricting carbon emission is the surge in the electricity price. This is due to the fact that industries have to shift away from traditional fuels such as oil to electricity for energy. Therefore the authors propose that industrial policies aimed at balancing electricity price should accompany the plan to reduce carbon emission.

Originality/value

For Korean economy, the effects of emission reduction is researched using Armington and Melitz model at the same time. Especially, this is the first research case using the Melitz model in this Korean topic.

Details

Journal of Korea Trade, vol. 22 no. 3
Type: Research Article
ISSN: 1229-828X

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Article
Publication date: 1 July 1998

Neil Dias Karunaratne

This study reviews the emergence of Thailand in the 1990s as the Fifth Tiger economy of Asia following the regime switch from an import substitution to export oriented…

Abstract

This study reviews the emergence of Thailand in the 1990s as the Fifth Tiger economy of Asia following the regime switch from an import substitution to export oriented industrialisation policy. A Computable General Equilibrium (CGE) model was formulated to analyse the macroeconomic and sectoral implications of implementing trade liberalisation policies in Thailand. The theoretical structure, database underpinning the model and the solution technique used to generate empirical results are explained. The simulation of trade liberalisation policy has been proxied by an across‐the‐board tariff cut on the sectoral imports. The comparative statics of both the macroeconomic and sectoral effects of trade liberalisation policy simulation over the decade ending in the year 2000 are analysed in detail. The study concludes with some observations on the controversy surrounding the distributional effects of trade liberalisation in Thailand.

Details

International Journal of Social Economics, vol. 25 no. 6/7/8
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 7 November 2019

Charity Gomo

The purpose of this paper is to quantify the impact of social or government transfers on income inequality and poverty in South Africa.

Abstract

Purpose

The purpose of this paper is to quantify the impact of social or government transfers on income inequality and poverty in South Africa.

Design/methodology/approach

A top-down, bottom-up (TD-BU) model which combines an econometrically estimated labor supply model, a detailed tax-benefit module and a computable general equilibrium model is used in order to analyze the impact of government transfers on income inequality and poverty in South Africa. The paper uses a merged South African income and expenditure household survey and labor force survey for the year 2000, and a South African social accounting matrix as the main data sets.

Findings

Simulation results suggest that doubling of government transfers lead to a 5.5 percent reduction in poverty if a relative poverty measure is used and a 7 percent reduction if an absolute poverty line is used. In addition, simulation results show differences in poverty and inequality measures between the MS-only model and the linked TD-BU model confirming the importance of linking the two models.

Originality/value

The TD-BU approach is important since it explicitly accounts for the following aspects: that labor supply should adjust to changes in the tax-benefit model, general equilibrium effects and the heterogeneity of economic agents. This allows for a richer micro-household modeling.

Details

International Journal of Social Economics, vol. 46 no. 12
Type: Research Article
ISSN: 0306-8293

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