Search Results (112)

Agriculture is the primary sector sustaining the Indonesian economy. However, appropriate policies are also required to support the service sector. Therefore, this study aims to analyze two central policies: the impact of trade openness and the role of the service sector on agriculture and agro-industry in Indonesia. A Computable General Equilibrium (CGE) model with 2016 input–output tables cover 141 regions and 65 sectors based on the Global Trade Analysis Project (GTAP) Version 10 database. The results show that trade openness in the services sector significantly improves the performance and quality of service provision. The improved performance of the services sector will, in turn, encourage increased production in the agricultural and agro-industrial sectors, which rely heavily on service inputs in the production process. This suggests that trade openness in the services sector is important to sustain the performance of the agricultural sector. Full article

This study explores how carbon pricing and electricity market liberalization jointly contribute to China’s sustainable energy transition. Using a dynamic computable general equilibrium (CGE) model (CEEEA2.0), we simulate three policy scenarios—business as usual, emissions trading scheme (ETS) with regulated electricity prices, and ETS with market-based pricing—under a unified emissions cap. The results demonstrate that electricity market liberalization enhances carbon pricing efficiency by eliminating price distortions, leading to a 0.06% increase in GDP and a 12% reduction in emission abatement costs. However, liberalization also raises electricity and consumer prices, disproportionately affecting rural and low-income households. These findings underscore the need to balance economic efficiency and social equity in sustainability-oriented energy reforms. Our analysis emphasizes the importance of designing inclusive and just transition policies to ensure that carbon mitigation efforts support long-term environmental, economic, and social sustainability goals. Full article

This study uses a computable general equilibrium (CGE) model to analyze the impact of skilled and semi-skilled labor supply shocks on the Ethiopian economy and sectoral outputs. The study examines three policy scenarios: a 10% increase, a 15% increase, and a 20% increase in skilled and semi-skilled labor supply compared to a business-as-usual (BAU) scenario. The findings show that all three scenarios contribute to higher economic growth, investment, and exports. The impact on sectoral outputs is also significant, with the industry and services sectors performing better than the agriculture sector. In the 20% increase scenario, the real annual gross domestic product (GDP) growth rate is projected to be 0.79 percentage points higher than the business-as-usual scenario. Additionally, the annual growth rates of investments and exports are expected to be 2.69 and 2.31 percentage points higher, respectively, compared to their business-as-usual scenario counterparts. The agriculture sector experiences a slight increase of 0.16 percentage points in annual production compared to the business-as-usual scenario. Output in the industry sector also sees a rise of 1.61 percentage points higher than the business-as-usual scenario, while outputs in the services sector improve significantly. Overall, the study highlights the positive impact of increasing the supply of skilled and semi-skilled labor on the economy. This is mainly due to the higher productivity of skilled and semi-skilled workers, which contributes to increased economic growth. The findings suggest that governments should implement policies to enhance the supply of skilled and semi-skilled labor, such as investing in education and training programs. These measures would promote economic growth and improve living standards. Full article

Ecological environmental governance is not only a crucial aspect of the urbanization process, but also a key factor for achieving coordinated development between regional economies and the environment. This study utilizes a multi-regional Computable General Equilibrium (CGE) model to simulate the impact of varying degrees of environmental governance on urbanization in the Beijing–Tianjin–Hebei region. The results indicate that ecological environmental governance may exert certain negative effects on urbanization processes, such as GDP, household income, and industrial output; however, it also helps to reduce environmental pollution to some extent. From the different scenarios examined, we observed that both fully local environmental governance and proportional environmental governance result in impacts on urbanization development in Beijing, Tianjin, and Hebei. However, significant differences are evident among the three regions. The effects of ecological environmental governance on urbanization are the least pronounced in Beijing, followed by Tianjin, while Hebei experiences far greater disruptions, with economic declines exceeding 7%, significantly surpassing its capacity to cope. Based on these findings, this paper proposes several policy recommendations, including the necessity of differentiated intensities for ecological environmental governance, a gradual expansion of the governance scope, and the implementation of a diverse combination of policies for air pollution control and emissions reduction. Full article

Global warming caused by greenhouse gas emissions has become a worldwide environmental problem, posing a great threat to human survival. As the world’s largest emitter of carbon dioxide, China has pledged to reach peak carbon emissions by no later than 2030 and carbon neutrality by 2060. It is found that a carbon tax is a powerful incentive to reduce carbon emissions and promote an energy revolution, but it may have negative socio-economic impacts. Therefore, based on China’s 2020 input–output table, this paper systematically investigates the impacts of a carbon tax on China’s economy, carbon emissions, and energy by applying a computable general equilibrium model to determine the ideal equilibrium between socio-economic and environmental objectives. Based on energy use characteristics, we subdivided the energy sector into five major sectors: coal, oil, natural gas, thermal power generation, and clean power. The results show that when the carbon emission reduction target is less than 15%, that is, when the equilibrium carbon tax price is less than 54 yuan/ton, the implementation of a carbon tax policy can significantly reduce carbon emission and fossil fuel energy consumption, while only slightly reducing economic growth rate, and can achieve the double dividend of environment and economy. Moreover, because the reduction of coal consumption has the greatest impact on reducing carbon emissions, the ad valorem tax rate on coal after the carbon tax is imposed is the highest because coal has the highest carbon emission coefficient among fossil fuels. In addition, as an emerging clean energy source, hydrogen energy is the ideal energy storage medium for achieving clean power generation in power systems. If hydrogen energy can be vigorously developed, it is expected to greatly accelerate the deep decarbonization of power, industry, transportation, construction, and other fields. Full article

Accurately evaluating the effectiveness of the energy consumption “dual control” policy can effectively solve serious the current environmental pollution and promote ecological civilization. However, researchers have rarely considered the impacts on the regional “resource curse” of the energy consumption “dual control” policy. A dynamic computable general equilibrium model (CGE) was built to evaluate the impacts on the regional “resource curse” of the energy intensity control and total energy control policy. The results showed the following. (1) The energy consumption “dual control” policy changes the supply-and-demand relationship of factors and reduces the crowding-out effect of humans and capital. (2) The energy consumption “dual control” policy has restrained GDP growth, and the total output and total investment have declined. However, the impact in regions without the “resource curse” is remarkable. (3) The energy consumption “dual control” policy has a significant inhibitory effect on major pollutants and carbon emissions. (4) The energy consumption “dual control” policy has played a positive role in breaking the regional “resource curse”. The areas with a high and low “resource curse” have become smaller, and the areas without the “resource curse” have increased significantly. The following suggestions are made: (1) increase the flexibility of the “dual control” policy of energy consumption, (2) establish an energy consumption budget management system, and (3) accelerate the establishment of a carbon footprint management system. Full article

This research uses advanced statistical methods to examine climate change mitigation policies’ economic and environmental impacts. The primary objective is to assess the effectiveness of carbon pricing, renewable energy subsidies, emission trading schemes, and regulatory standards in reducing CO₂ emissions, fostering economic growth, and promoting employment. A mixed-methods approach was employed, combining regression analysis, cost–benefit analysis (CBA), and computable general equilibrium (CGE) models. Data were collected from national and global databases, and sensitivity analyses were conducted to ensure the robustness of the findings. Key findings revealed a statistically significant reduction in CO₂ emissions by 0.45% for each unit increase in carbon pricing (p < 0.01). Renewable energy subsidies were positively correlated with a 3.5% increase in employment in the green sector (p < 0.05). Emission trading schemes were projected to increase GDP by 1.2% over a decade (p < 0.05). However, chi-square tests indicated that carbon pricing disproportionately affects low-income households (p < 0.05), highlighting the need for compensatory policies. The study concluded that a balanced policy mix, tailored to national contexts, can optimise economic and environmental outcomes while addressing social equity concerns. Error margins in GDP projections remained below ±0.3%, confirming the models’ reliability. Full article

An ambitious per capita GDP target has been envisioned by the Chinese government since 2020 to project its sustainable economic growth rate by 2035. Can China fully achieve its goal? This is a question worth investigating. By inserting relevant TABLO modules of the final goods trade, the intermediate goods trade, and factor-strengthening technology spillovers, along with technology absorption thresholds effects of the global value chain, this study builds a global recursive dynamic computational general equilibrium (CGE) model on the basis of GTAP-RD. This approach enables us to consider total factor productivity (TFP) development through the “dual circulation” system, which was pointed out by the Chinese government as the only way for further growth. We simulate China’s technological progress under eight scenarios and use the latest GTAP Version 11 production and trade data (released in April 2023) for 141 countries and regions. The main conclusions are as follows: (1) If China maintains its trade opening policy, the 2035 vision goal can be achieved, with external circulation being more important than internal circulation. (2) The economic growth impacts of external and internal circulation function relatively independently. FDI offers a somewhat stronger synergistic effect on intermediate goods trade compared to final goods trade and consumption. (3) We find that the Regional Comprehensive Economic Partnership is the most important strategic partner for China. (4) FDI is not an effective way to lift the productive services sector’s TFP, and it is more realistic for China to open up the productive services market more widely. (5) China–US decoupling has an enormous global impact, and the United States is always the country that loses the most, with Europe being the group of countries that benefits when there is a large increase in TFP in the US. This study is entirely original in terms of its model structure, simulations, scenarios, and shocks. It aims to fill the gap of extending the application of the CGE model to specific issues, thereby making contributions and supplements to the three theories discussed in the article too. The limitation of this paper lies in the CGE linear description feature, which is concise and elegant and has the characteristics of extrapolation and long-term absorption of disturbances. However, it tends to overlook the randomness, non-convergence, and significant structural disturbances that may occur in future reality. Full article

Public debt plays a major role in financing projects that support economic growth and sustainable development. As governments may choose between domestic and external borrowing, a comprehensive assessment of their effects would support this choice. Our study provides an integrative view of economic and social outcomes and compares, through externalities, the impacts of external and domestic public debt as methods of financing development, with a focus on the Cameroonian economy. Utilizing a dynamic computable general equilibrium (CGE) model and a microsimulation analysis, we find that domestic debt has more advantages for Cameroon compared to external debt, as it increases the large-scale economic impact by improving household welfare, boosting GDP growth, and progressively reducing poverty and inequality. It is therefore recommended that the Cameroonian government focus on increasing the use of domestic debt as a method of financing development by implementing policies that support domestic saving and promote the development of domestic debt markets. Full article

The carbon emissions of the power industry account for over 50% of China’s total carbon emissions, so achieving carbon peak and carbon neutrality in the power sector is crucial. This study aims to simulate the impacts of three energy policies—carbon constraints, the development of a high proportion of renewable energy, and carbon trading—on China’s energy transition, economic development, and the power sector’s energy mix. Through the construction of a dynamic computable general equilibrium (CGE) model for China and its integration with the SWITCH-China electricity model, the impact of diverse energy policies on China’s energy transition, economic progress, and the power mix within the electricity industry has been simulated. The integration of the SWITCH-China model can address the limitations of the CGE model in providing a detailed understanding of the specific intricacies of the electricity sector. The results indicate that increasing the stringency of carbon restrictions compels a reduction in fossil energy use, controlling the output of coal-fired power units, and thereby reducing carbon emissions. The development of a high proportion of renewable energy enhances the cleanliness of the power sector’s generation structure, further promoting the national energy transition. Implementing a carbon trading policy, where the entire industry shares the burden of carbon reduction costs, can effectively mitigate the economic losses of the power sector. Finally, the policies to further enhance the implementation of carbon trading policies, strengthen effective governmental regulation, and escalate the deployment of renewable energy sources are recommended. Full article

This study examines the effects of the Regional Comprehensive Economic Partnership (RCEP) on the value-added trade of food and non-food sectors. This study uses a global computable general equilibrium (CGE) model coupled with an extension module for the origin decomposition of value-added flows embodied in gross trade. The results suggest that by cutting down tariff and non-tariff barriers, the RCEP would significantly stimulate the economies of and gross trade among Asia–Pacific countries involved in the agreement. The potential benefits of the RCEP will be overestimated if we ignore the origin of value added and measure the benefits by gross exports. The domestic components of bilateral value-added flows between RCEP members would increase greatly, indicating an increasingly integrated value chain between RCEP members. Import taxes and non-tariff barriers for processed food, textiles and clothes, and heavy manufacturing are relatively significant in the region, so the RCEP would significantly improve their value-added exports. The domestic component of value-added exports in agricultural products and processed food from RCEP members would be increased significantly, indicating that the closely integrated food value chain boosts the food economies of RCEP members. Full article

In this study, we aimed to find a fair exchange rate for Egypt, exploring how exchange rate policies affect the country’s economic growth and food security. We also sought to answer an important question for Egyptian policymakers: “Do current exchange rate policies help reduce Egypt’s trade deficit?”. We used two methods in our research: First, we applied the purchasing power parity (PPP) method to determine the equilibrium real exchange rate (ERER). Then, we combined the computable general equilibrium model (CGE) with the ERER value from the PPP method to observe how different sectors interact with the overall economy and understand how household incomes and poverty levels are related. Our findings showed that the fair exchange rate is EGP 38.5 per US dollar, according to the PPP method. This new exchange rate may significantly impact the Egyptian economy. Some impacts are positive, such as better real GDP, more exports, and fewer imports; however, these are minor and not significant. On the downside, it may lead to higher inflation, increased prices for goods, and reduced consumption. Moreover, this study highlights the importance of having balanced exchange rate policies that consider Egypt’s unique economic situations, and challenges and align with other economic policies. Experience and reality have shown that exchange rates alone are not the only solution. Full article

Demand for high-quality white oak sawlogs in Kentucky has been increasing for decades. Concurrently, Kentucky is witnessing ecological shifts in the historically white oak-dominated forests, mirroring the structural changes in oak forests in the eastern US. This demand–supply dissonance presents a growing concern among stakeholders on the sustainability of white oak and its associated economic implications. In this context, the objective of this study was to assess the potential economic impacts of the projected white oak timber supply following an overall increased supply of white oak sawlogs but reduced supply of high-quality white oak sawlogs in Kentucky. Results generated from a dynamic computable general equilibrium (CGE) model indicate a cumulative present-value GDP reduction of USD 3.66 billion, a USD 0.71 billion decline in consumer welfare, and other sectoral contractions over 40 years (2018–2058). These results can be used to advocate for more proactive forest management practices to stabilize a sustained supply of high-quality white oak timber in Kentucky and beyond. Full article

This study formulates a mathematical dynamic Computable General Equilibrium (CGE) model within a rational expectations framework, adhering to neo-classical principles. It emphasizes the significant role of agents’ expectations in determining the broader economic trajectory over time. The model combines microeconomic and macroeconomic perspectives by merging the concept of intertemporal choice with savings behavior. Its mathematical foundations are derived and calibrated using data from a social accounting matrix to enhance its simulation capabilities. The paper presents a practical simulation investigating the economic implications of a strategic investment impact within an specific European region, Madrid as the case of study. Such demand shock affects sectors such as electronics, food, pharmaceuticals, and education. The study models the long-term effects of heightened investment and persistent demand-side shocks. The research demonstrates the CGE model’s ability to forecast economic shifts toward a new equilibrium after an investment shock, proving its utility for assessing the impacts of extensive environmental policies within a European context. The work’s originality lies in its detailed mathematical formulation, contributing to theoretical discourse and practical application in business analytics. Full article

What exactly is the contribution of the South-to-North Water Transfer Project (SNWTP)? This is a subject of much debate. There are concerns about the possible effects on the macroeconomy. Most previous studies have tried to answer this question. In order to answer this question quantitatively, it is necessary to separate the effect of SNWTP from many influencing factors. A computable general equilibrium model (SICGE) was built to estimate the economic effect of the South-to-North Water Transfer Project on Beijing. This CGE model was modified by joining the subdivided water substitution module, the total water constraints module, and the water-capital substitution module. Two scenarios were set: one with SNWTP and one without SNWTP. The what-if scenario (without SNWTP) indicates that the water reduction poses a direct threat to economic growth. Employment, capital, and GDP are lower, largely due to water shortages suffered by many industries by comparative analysis with or without SNWTP. The water utilization for the water-intensive industry will decrease the most, and its output will also decrease the most. Without SNWTP, groundwater extraction will increase, which suggests that SNWTP water will tentatively replace groundwater. Full article