Multi-energy synergy and deep carbon emission reduction mechanism for steel enterprises based on deep learning and dynamic computable general equilibrium model

Assessing the economic impact of public investment in Malaysia: a case study on MyRapid Transit project using a dynamic computable general equilibrium model

Developing ‘travelthai’: a dynamic Computable general equilibrium model for tourism of Thailand and case applications on tourism setbacks and tourism-related fiscal policies

This thesis investigates the effects of trade on the labour market in Malaysia. Specifically, we study the impact of a tariff cut in the motor vehicle industry on the different occupational wages and employment. Tariffs played an important role in Malaysia’s economic development; from an import-competing economy to an export-oriented economy. The literature on trade, wages and employment for Malaysia is limited because of inadequate occupational data to carry out econometric analysis. To fill this gap, we use a dynamic computable general equilibrium (CGE) model for the Malaysian labour market, MyAGE_LM to analyze the effects of a reduction in motor vehicle tariffs. CGE models have theoretical rigour and extensive analytical capabilities for carrying out policy analysis. This thesis contributes to the literature by (i) Introducing labour supply with nine different occupational groups into the dynamic CGE model for Malaysia and (ii) Analyzing a reduction in the motor vehicle tariff rate in Malaysia. The policy simulation is a 5 per cent cut in the motor vehicle tariff rate. To facilitate the analysis of the tariff cut, the MyAGE_LM model incorporates the labour market mechanism similar to that of Dixon and Rimmer (2003; 2008). The simulation results for the impact of the tariff cut on macroeconomic indicators, sectoral outputs and nine categories of occupational wages and employment are presented. The results are analyzed in terms of major model mechanisms. The macroeconomic results of the tariff cut indicate that in the short run, with the government aiming for revenue neutrality through increased labour taxes, there would be a small welfare gain. We also found that in the short run, exports fell despite real devaluation. So, the export sectors do not benefit in the short run. In the long run, aggregate real wages increase, and there is an economy-wide gain in GDP and aggregate consumption. The sectoral results revealed that most export-oriented industries would experience an increase in output. There are some evident effects on occupational wages and employment. The occupational group that stands out is the semi-skilled occupational group, SklAgriFish. This occupational group experienced the biggest decrease in vacancies. SklAgriFish occupations do well because no workers in this occupation are employed in the motor vehicle industry. Also, a significant proportion of SklAgriFish workers are hired in the export-oriented Agriculture industry, and the Agriculture industry sells to FoodBevTob (which does well in the long run because of real devaluation). The PlantMachOpr occupation does relatively well because a high proportion of these workers is employed in OthMachEquip industry (export-oriented and a winner from tariff cut in the long run). In general, from the MyAGE_LM policy simulation, we find that the tariff cut did not have a significant impact on the labour market. There are only small changes in average real wages and employment. We find damped labour supply effects in both the short and the long run. Semi-skilled occupations gain relative to skilled and unskilled workers. Skilled workers do not do well. They are mainly hired in non-traded industries that scarcely use imported motor vehicles

Malaysia, as one of the top energy subsidizing countries, has announced to remove energy subsidies necessarily, not only to reduce energy consumption and the government budget deficit but also to improve overall efficiency and air quality. Therefore, this study evaluates the impacts of rationalizing energy subsidy and its energy efficiency improvement during 2010–2030 using a dynamic recursive computable general equilibrium model. Results revealed that reducing energy subsidies decreases energy consumption and emissions of all air pollutants. While the economic performance of the country improves in the long run due to stimulation in capital demand and investment, it reduces in the short run. Energy efficiency also improves by 1.1% and 2.3%, in the short run, in response to a reduction of 10% and 100% in energy subsidies, respectively. Energy efficiency improvements decrease the negative effects of pure subsidy policies on real GDP, trade, investment, and household consumption. The efficiency improvement policies also are effective in reducing more level of the rebound effect and lead to more energy saving in the economy, particularly in the petroleum products sector. The impacts on the rebound effect also differ across economic sectors. The results of this study provide new insights for energy subsidy policy and energy efficiency and suggest that additional tools and policies are required for improving the energy efficiency caused by phasing out energy subsidies. Malaysia, as one of the top energy subsidized countries, attempts to reduce the level of energy subsidies over time and, consequently, decline the use of fossil fuels in the economy. Therefore, this study analyzes the impacts of different subsidy reform policy on energy efficiency and, consequently, on economic and environmental performance and rebound effect of Malaysia by a recursive dynamic computable general equilibrium model.

This paper examined the macroeconomic influence of tax reform on the Ethiopian economy using the Dynamic Computable General Equilibrium model. It utilized the updated 2009/2010 Ethiopian Social Accounting Matrix (SAM) from 2005/2006 developed by Ethiopian Development Research Institute (EDRI). To investigate the impact of tax reform on the Ethiopian economy, different simulations were made turn by turn. First, a reduction in direct tax by 30% is introduced to see the impacts of direct tax reduction on the economy. As a result, macroeconomic variables such as GDP, absorption, private consumption, government expenditure, import, export, government income, investment, and aggregate output show a considerable improvement. Additionally, there is an increase in factor income and welfare gain for households though the factor supply of labor and land is fixed compared to base case scenarios. On the second simulation, an increase in sales tax by 67% was introduced to examine at the impact of sales tax on the economy. Thus, increases in sales tax improve the overall economic performance compared to direct reduction. However, under the third simulation decrease in import tariff by 24% worsened the general economic performance by encouraging import and depressing domestic output. Based on the finding, encouraging consumption tax reform, protecting the home country from external sector influence to encourage domestic production is the major policy option recommended to bring a good economic performance with lower distortion since we cannot abolish distortion when we conduct tax reform. Key words: Ethiopia, tax reform, tax revenue, macroeconomics performance, dynamic computable general equilibrium.

Climate change is widely acknowledged as a serious threat to global development, and Bangladesh is no exception; without a doubt, global warming has placed Bangladesh among the most vulnerable countries. The motivation behind this paper is to examine the effects of climate change by taking into account the changes in temperature and precipitation over time. This paper first evaluates the climate change impact on crop production by using a crop modeling framework and then constructs a dynamic computable general equilibrium (CGE) model. The result of this study finds that average gross domestic product (GDP) decreases by −6.17% and investment declines by −7.76% due to the climate change impact. The impacts of climate change on rice sectors were felt more intensely, increasing prices by 5.82 and 8.11%, reducing output by −3.08 and −3.7% collectively in 2030 and 2050. The agricultural sectors’ output declined more compared to the manufacturing, mining and gas, construction, service and transportation sectors, which indicates declines in agricultural labor and household income. In conclusion, the impact of climate change by analyzing the computable general equilibrium model in Bangladesh had been paid little attention in the past and this paper tried to fill the gaps and provide policy-makers with crucial information and guide government policies.

PurposeEvaluating the economic effects of climate change is a pivotal step for planning adaptation in developing countries. For Bangladesh, global warming has put it among the most vulnerable countries in the world to climate change, with increasing temperatures and sea-level rise. Hence, the purpose of this paper is to examine how climate change impacts the economy in Bangladesh in the case of climate scenarios.Design/methodology/approachUsing a dynamic computable general equilibrium (CGE) model and three climate change scenarios, this paper assesses the economy-wide implications of climate change on Bangladesh’s economy and agriculture. It is clear from the examination of the CGE model that the impacts of climate change on agricultural sectors were felt more sharply, reducing output by −3.25% and −3.70%, respectively, and increasing imports by 1.22% and 1.53% in 2030 and 2050, compared to the baseline.FindingsThe findings reveal that, relative to baseline, agricultural output will decline by a range of −3.1% to −3.6% under the high climate scenario (higher temperatures and lower yields). A decrease in agricultural output results in declines in agricultural labor and household income. Household income falls in all categories, although it drops the most in urban less educated households with a range of −3.1% to −3.4%. On the other hand, consumption of commodities will fall by −0.11% to −0.13%, according to the findings. Although climate change impacts had a relatively small effect on gross domestic product, reducing it by −0.059% and −0.098% in 2030 and 2050, respectively.Practical implicationsAs agricultural output, household consumption and income decline, it will impact the majority of the population’s health in Bangladesh by increasing malnutrition, hidden hunger, poverty, changing food environment, changing physical and mental health status and a changing health-care environment. Therefore, population health and food security will be a top socioeconomic and political concern for Bangladesh Government.Originality/valueThe examination of the dynamic CGE model is its originality. In conclusion, the evidence generated here can provide important information to policymakers and guide government policies that contribute to national development and the achievement of food security targets. It is also necessary to put more emphasis on climate change issues and address potential risks in the following years.

Agricultural production depends heavily on climate conditions; therefore, climatic uncertainty caused by global warming represents a significant threat not only to agriculture but also to entire economies. Furthermore, the drastic budget cuts after 2001 in Japan have reduced public capital stock and have placed the production capacities of various industries in jeopardy. This highlights the need for asset management to prolong the structural integrity of facilities. The present study uses the recursive dynamic computable general equilibrium (CGE) model to evaluate asset management measures (namely, those focusing on reinforcing old facilities) in the context of climatic uncertainty. Simulation results showed that the uncertainty of production induced by climate change is amplified through the market mechanism. The variation in the total production was much wider than the variation in agricultural production originally affected by the climate change. The public capital stock maintained by the asset management measures can ease such uncertainty. Therefore, asset management policy, which makes the deficit minimal leeway for increasing public investment, is critical in Japan. The dynamic CGE model can also measure such long-term comprehensive effects and is useful for policy analysis.

With large shares in global trade and carbon emissions, China's international trade is supposed to be significantly affected by the proposed carbon-based border tax adjustments (BTAs). This paper examines the impacts of BTAs imposed by USA and EU on China's international trade, based on a multi-sector dynamic computable general equilibrium (CGE) model. The simulation results suggest that BTAs would have a negative impact on China's international trade in terms of large losses in both exports and imports. As an additional border tariff, BTAs will directly affect China's exports by cutting down exports price level, whereas Chinese exporting enterprises will accordingly modify their strategies, significantly shifting from exports to domestic markets and from regions with BTAs policies towards other regions without them. Moreover, BTAs will affect China's total imports and sectoral import through influencing the whole economy in an indirect but more intricate way. Furthermore, the simulation results for coping policies indicate that enhancing China's power in world price determination and improving energy technology efficiency will effectively help mitigate the damages caused by BTAs.

The challenge of meeting the ever-increasing food demand for the growing population will be further exacerbated by climate change in Ethiopia. This paper presents the simulated economy-wide impacts of climate change on the agriculture sector of Ethiopia using a dynamic computable general equilibrium (CGE) model. The study simulated the scenarios of agricultural productivity change induced by climate change up to the year 2050. At national level, the simulation results suggest that crop production will be adversely affected during the coming four decades and the severity will increase over the time period. Production of teff, maize and sorghum will decline by 25.4, 21.8 and 25.2 percent, respectively by 2050 compared to the base period. Climate change will also cause losses of 31.1 percent agricultural GDP at factor cost by 2050. Climate change affects more the income and consumption of poor rural households than urban rural non-farming households. The reduction in agricultural production will not be evenly distributed across agro ecological zones, and will not all be negative. Among rural residents, climate change impacts tend to hurt the income of the poor more in drought prone regions. Income from labor, land and livestock in moisture sufficient highland cereal-based will decline by 5.1, 8.8 and 15.2 percent in 2050. This study indicated that since climate change is an inevitable phenomenon, the country should start mainstreaming adaptation measures to sustain the overall performance of the economy.

Carbon-based border tax adjustments (BTAs) have recently been proposed by some OECD countries to level the carbon playing field and target major emerging economies. This paper applies a multi-sector dynamic computable general equilibrium (CGE) model to estimate the impacts of the BTAs implemented by US and EU on China's sectoral carbon emissions. The results indicate that BTAs will cut down export prices and transmit the effects to the whole economy, reducing sectoral output-demands from both supply side and demand side. On the supply side, sectors might substitute away from exporting toward domestic market, increasing sectoral supply; while on the demand side, the domestic income may be strikingly cut down due to the decrease in export price, decreasing sectoral demand. Furthermore, such shrinkage of demand may similarly reduce energy prices, which leads to energy substitution effect and somewhat stimulates carbon emissions. Depending on the relative strength of the output-demand effect and energy substitution effect, sectoral carbon emissions and energy demands will vary across sectors, with increasing, decreasing or moving in a different direction. These results suggest that an incentive mechanism to encourage the widespread use of environment-friendly fuels and technologies will be more effective.

With large shares in global trade and carbon emissions, China’s international trade is supposed to be significantly affected by the proposed carbon-based border tax adjustments (BTAs). This paper examines the impacts of BTAs imposed by USA and EU on China’s international trade, based on a multi-sector dynamic computable general equilibrium (CGE) model. The simulation results suggest that BTAs would have a negative impact on China’s international trade in terms of large losses in both exports and imports. As an additional border tariff, BTAs will directly affect China’s exports by cutting down exports price level, whereas Chinese exporting enterprises will accordingly modify their strategies, significantly shifting from exports to domestic markets and from regions with BTAs policies towards other regions without them. Moreover, BTAs will affect China’s total imports and sectoral import through influencing the whole economy in an indirect but more intricate way. Furthermore, the simulation results for coping policies indicate that enhancing China’s power in world price determination and improving energy technology efficiency will effectively help mitigate the damages caused by BTAs.

Agriculture has always been the subject of close attention from governments in Morocco, owing among other reasons to its relationships with other sectors, its importance in foreign trade and its role in providing foodstuffs in rural and urban areas. Indeed, agriculture accounts for 15 to 20% in GDP and employs 44% of the labor force. If we add food processing, its contribution to GDP and employment amounts to 15% and 50%, respectively. However, Moroccan agriculture suffers from low productivity, low yields and high logistics, and production costs. For these reasons, agriculture has enjoyed tax exemptions to encourage and promote private and foreign investments. Nevertheless, the tax advantages became a source of distortions and inefficient allocation of investments and resources toward this sector. To analyze the implementation impact of a new system of agricultural taxation, we built a dynamic multi-sectoral computable general equilibrium (CGE) model. This model is more preferable and suitable than macro-econometric or partial equilibrium economic models because of its dynamic structure, which makes it possible to catch the intertemporal effects of taxation on the well-being of farmers and on the economy as a whole. In addition, we run an unconditional sensitivity analysis to prove that the variability of the model as a whole is not too significant after simultaneous modification of all the parameters. To do this, the Gaussian Quadrature Method is implemented as developed by Arndt, De Vuyst and Preckel, and Piet.

Aim/purpose – This study sought to assess the impact of an increased historical fixed VAT rate of 14% to the current rate of 15% on the South African economy. Design/methodology/approach – The method applied in this study was based on a Dynamic Computable General Equilibrium (CGE) model to evaluate the impact of both the VAT rate of 14% and a new rate of 15% on the South African economy. The CGE model has been proven over the years to be a suitable model when evaluating the impact assessment of any shock within an economy. Enhancements were made by the researcher to the direct and indirect tax section of the model, i.e., the direct tax section was disaggregated, such that for both firm and household revenues, a dividend income stream is separated from other income streams. The main reason is to facilitate a detailed analysis of Corporate Income Tax (CIT) and Personal Income Tax (PIT), as well as the latest implemented Dividend Tax (DT). Findings – When VAT was increased from 14% to 15%, the immediate reaction of the shock from the Dynamic CGE model indicates that the Gross Domestic Product (GDP) declined by 0.0002% in 2018, but increased by 0.0028% in the following year (2019). The trend continued until 2021, hence the 1% increase in the VAT tax rate will increase the expected forecast of VAT collection by approximately R3.2 billion on average. Research implications/limitations – The findings of this study will be implemented by the South African government, which will use a dynamic CGE model to assess South Africa’s VAT contribution to the economy. The database of the CGE model was limited to the Social Accounting Matrix (SAM) for 2015. Originality/value/contribution – The study recommends the use of this method for assessing the impact of tax policy changes to the South African economy. The CGE model seems to be the best model as far as the impact assessment of a shock in the econ- omy is concerned. This will assist the South African authorities with their decision mak- ing regarding future VAT revenue. Keywords: South African Revenue Service (SARS), Value Added tax (VAT), Dynamic computable general equilibrium (CGE) model. JEL Classification: H21, C68, E62.

A novel dynamic computable general equilibrium model based on National Water Resource Input Holding Output Table is proposed to calculate the Shadow Price of water resource in China. Unlike previous approaches, the dynamic Shadow Price of water resource is largely based on the scarcity extent and can reflect the marginal long-term value in the balanced growth path of China. Firstly, the basic concepts of dynamic Input Output analysis and Turnpike Theory are reviewed. Then, Dynamic Computable General Equilibrium (DCGE) is elaborated to calculate the Shadow Price, including the definition and computer-based algorithm. Furthermore, Shadow Price of water resource in China from 1949 to 2050 is calculated based on the DCGE. Also the sensitivity analysis of the DCGE for Shadow Price of water resource in China is presented. Dynamic Shadow Price of water resource has two meanings for China government: (1) Project evaluation. Every large-scale project in China must have national economic evaluation and the dynamic Shadow Price is prerequisite for national economic evaluation. (2) Market price of water resource. A lesson from this paper is that Shadow Price of water resource in domestic market of China should be rewritten according to the dynamic Shadow Price. In addition, the parallel computations approach could also be used to solve these problems in different countries or for different natural resources.