Final Consumption Goods Research Articles

Analyzing economy-scale solid waste generation using the United States environmentally-extended input-output model

The United States Environmentally-Extended Input-Output (USEEIO) model includes commercial enterprises from 386 industrial sectors of the economy. The purpose of this work is to model the commercial generation of three streams of solid waste from USEEIO sectors: hazardous waste, non-hazardous waste excluding construction, and non-hazardous waste from construction. The waste accounts cover 536 waste materials, with commercial non-hazardous waste presently limited to municipal solid waste and construction and demolition debris. Total combined generation for all streams based on 2015 economic activity is approximately 775 million metric tons, with concrete from construction activities accounting for 44% of this mass. The chemical and plastics industries generate the most commercial hazardous waste per dollar of economic output. In most cases, waste materials such as paper, plastic, and metals are generated in greater quantities per dollar of industry output when compared to commercial construction materials and hazardous waste. When considering direct waste generation within an industry, USEEIO model rankings identified the highway and street construction and chemical manufacturing industries as potential areas to continue to pursue new innovations in material use. The rankings change when considering final consumption of goods and services, with various construction industries and state and local governments becoming more prominent. The full detailed waste models are publicly available and will be incorporated into future USEEIO releases. Quantification of waste material generation across the economy is an essential part of decision making because it will highlight areas where intervention may be beneficial.

Sourcing from conflict regions: Policies to improve transparency in international supply chains

AbstractIn this paper, we study how unilateral policies concerning certain conflict raw materials influence prices, illegal mining activities, and welfare. Firms in the North import natural resources from the South to produce final consumption goods. In one of the countries in the South, local groups attempt to access natural resources, which results in rent‐seeking conflicts with the government and in illegal mining. We find that a unilateral embargo against the conflict country as well as certification of legal mines can reduce rent‐seeking and illegal mining with different welfare consequences in the countries involved.

Determinants of Trade Balance in Ethiopia

This study attempted to indentify the short and long-run determinants of trade balance in the case of Ethiopia‘s economy for the period 1978 to 2009. In order to achieve the stated objectives a synthesis model of absorption, elasticity and monetary approaches to trade balance is estimated using Engle- Granger two step procedures of cointegration and general to specific error correction model. The findings of the study suggest that the most important long run determinants of trade balance are household consumption expenditure, real effective exchange rate and terms of trade while government consumption expenditure, house hold consumption expenditure, real effective exchange rate and terms of trade are the short run determinants of trade balance. Based on the findings of this study the researcher recommended raising import tariff on final consumer goods , expand industrial base, increase domestic saving to finance domestic investment, depreciation/ devaluation of birr and improving the quality of domestic products to solve the trade imbalance.

The impact of China's trade liberalisation on the greenhouse gas emissions of WTO countries

We examine the effects of China's trade liberalisation, post entry into the WTO, on the greenhouse-gas (GHG) emissions of its trading partners. Using complementary estimators we establish that China's liberalised trade had significant effects on the GHG emissions of its trading partners. Increased exposure to Chinese exports increased the growth of consumption-based emissions while reducing production-based emission. The increase in consumption-based emissions was larger than the decrease in production emissions. Consumption emissions increased both through a scale effect (consumption increased) and a composition effect (consumption became more emissions intensive). Decomposition analysis suggests that the link between exposure to Chinese exports and the increase consumption-based emissions is the emissions embodied in imports: The emissions embodied in imports increased and imports became more emissions intensive. The increase in imported emissions was not offset by a reduction in domestic production of emissions either in final consumption goods or exports. (JEL: Q53, Q54, Q55).

The Effects of Exports on Employment in Korean Manufacturing: An Industry-Level Analysis

This article begins with the question of what is the main reason why export growth does not lead to sufficient job creation, and examines the relationship between exports and employment from various perspectives. We applied the growth accounting method to decompose the changes in employment induced by exports into the scale and composition effects on employment, so that it captures the employment effect caused by the changes in the composition of export products. From this analysis, it can be seen that the reduction in the employment effect of exports is highly correlated with the changes in the composition of the export products toward less labor-intensive. From the empirical analysis using industry-level data, it is confirmed that the higher the capital intensity, the lower the export elasticity of employment. Another interesting founding is that the export elasticity of employment is higher when the export proportion of SMEs (or final consumption goods) is larger.

Country size and trade in intermediate and final goods

AbstractThis paper documents a negative relationship between country size and the share of final consumption goods in total exports. A model is developed, based on the division of labour and comparative advantage, to explain this relationship. Labour is used to produce traded intermediate inputs which are used in the production of traded final goods. Large countries gain relatively more from comparative advantage than from the division of labour, while the opposite is true for small countries. As in the data, large countries export a smaller share of final goods and a larger share of intermediate goods than small countries. It is shown that the model developed in the paper yields the same results as a model based on monopolistic competition.

The Past and Future of China's Role in the East Asian Economy: A Trade Perspective

Since the 1990s, the development of a market-oriented economy and engagement with globalization have given China a role as the primary export platform of the East Asian economy. This has not only promoted the exports of capital and intermediate goods of other East Asian economies, but it has also deepened the regional production networks under the US-dominated global economic system. Currently, as China is entering an economic “new normal,” its economic structure and growth pattern will experience a period of transition. Thus, its role in the East Asian economy and the global economic system will change accordingly. China's new role as a main market for the final consumer goods in the region might increase. To facilitate its change in role, China should continue to reform its domestic economy, develop regional economic cooperation, and increase the qualities of its labour force and foreign direct investment inflows. In addition, it needs to deal with several uncertainties that might arise during the transition.

Trade between Creative Regions When the Input Elasticity of Substitution is Less than Unity

We analyze a model of trade between J heterogeneous regions that are creative in the sense of Richard Florida. There are two non-traded final goods that are used for consumption and investment. There is a continuum of inputs that are freely traded between the creative regions. There is no borrowing or lending between the creative regions. Specifically, we study the impacts of free trade in inputs when the elasticity of substitution between the traded inputs that are used to produce the final consumption and investment goods is less than unity. We first show that creative regions that have lower discount rates will be relatively poor and hence worse off with trade when the above elasticity of substitution is less than one. Next, we explain in detail why this negative result obtains.

Interpreting Shocks to the Relative Price of Investment with a Two-Sector Model

Consumption and investment comove over the business cycle in response to shocks that permanently move the price of investment. The interpretation of these shocks has relied on standard one-sector models or on models with two or more sectors that can be aggregated. However, the same interpretation continues to go through in models that cannot be aggregated into a standard one-sector model. Furthermore, such a two-sector model with distinct factor input shares across production sectors and commingling of sectoral outputs in the assembly of final consumption and investment goods, in line with the U.S. Input-Output Tables, has implications for aggregate variables. It yields a closer match to the empirical evidence of positive comovement for consumption and investment.

The impact of renewable energy diffusion on European consumption-based emissions

ABSTRACTThe amount of carbon embedded in the final consumption of goods and services in a country or region depends on the amount of goods and services consumed and the emission intensity of the production processes along global production chains. A reduction of consumption-based emissions can be achieved from both sides, a reduction in total consumption and a reduction in the emission intensity of the production processes. The power sector is one of the most carbon intensive industries along global production chains and the global deployment of renewable power generation technologies (RPGTs) is one possibility to significantly reduce emissions in this industry. This paper combines three different strands of literature, multi-regional input–output analysis, dynamic energy–economy–environment models and technological change in renewable energy (RE), to model the impact of the global diffusion of renewable energies on European consumption-based emissions. The global diffusion of RE technologies (photovoltaic and wind) depends on the development of technology costs, which are modeled using learning curves. With increasing deployment of renewables within the EU as well as increasing RD&D efforts, the EU can achieve an accelerated costs decrease for these technologies, thus fostering deployment of RPGTs at a global scale through the effect of decreasing costs. This behavior indirectly influences the electricity mix abroad, making it less carbon intensive, so that consumption-based emissions of the EU decrease.

An Analysis of Trade Patterns in East Asia and the Effects of the Real Exchange Rate Movements

This paper investigates how patterns of vertical specialization in trade among the three major East Asian economies ― China, Japan and Korea ― are shaped, and what the effects of the real exchange rate fluctuations on trade volumes are. We develop a simple two-country model that focuses on the multistage production process, and apply TimeVarying Parameter (TVP) VAR to the countries’ bilateral trade data. From our theoretical model, we find two distinct features of vertical specialization where multistage production processes occur: one is that, when a multistage production process exists, an increase in final demand in one country causes both countries’ intermediate goods exports to expand; the other is that, if a multistage production process exists in the production of one country’s final goods, then real depreciation of the currency in the other country has an amplified effect through the circulating trade chain. In the following empirical analysis, we first find that a multistage production process is prominent in the production of China’s final consumption goods. Another finding is that the existence of a multistage production process across two countries, especially Korea and China, strengthens the effect of the real exchange rate on intermediate goods trades through the amplified effect that the theoretical model predicts.

From export platform to market provider: China’s perspectives on its past and future role in a globalised Asian economy

Since the 1990s China’s development of a market-oriented economy and its engagement with globalisation have given it a role as the primary export platform of a globalised Asian economy. This has not only promoted the exports of capital and intermediate goods of the other leading Asian economies, but has also stabilised the fluctuations of the Asian economy and deepened the regional production networks in the US-dominated global economic system. As China is entering an economic ‘new normal’, its economic structure and growth pattern will experience a period of transition. Thus its role in the Asian economy and the global economic system will change. China’s new role as a market provider for the final consumer goods from the region might increase. China’s efforts to reform its domestic economy and develop regional economic cooperation arrangements will helpful in accomplishing this role change, but various uncertainties and contingencies might continue to pose obstacles for this process.

Atmospheric mercury footprints of nations.

The Minamata Convention was established to protect humans and the natural environment from the adverse effects of mercury emissions. A cogent assessment of mercury emissions is required to help implement the Minamata Convention. Here, we use an environmentally extended multi-regional input-output model to calculate atmospheric mercury footprints of nations based on upstream production (meaning direct emissions from the production activities of a nation), downstream production (meaning both direct and indirect emissions caused by the production activities of a nation), and consumption (meaning both direct and indirect emissions caused by final consumption of goods and services in a nation). Results show that nations function differently within global supply chains. Developed nations usually have larger consumption-based emissions than up- and downstream production-based emissions. India, South Korea, and Taiwan have larger downstream production-based emissions than their upstream production- and consumption-based emissions. Developed nations (e.g., United States, Japan, and Germany) are in part responsible for mercury emissions of developing nations (e.g., China, India, and Indonesia). Our findings indicate that global mercury abatement should focus on multiple stages of global supply chains. We propose three initiatives for global mercury abatement, comprising the establishment of mercury control technologies of upstream producers, productivity improvement of downstream producers, and behavior optimization of final consumers.

On economic growth and investment income taxation in a creative region

We study economic growth and investment income taxation in a region that is creative in the sense of Richard Florida. Specifically, this region possesses both creative and physical capital. Of the two sectors in this region, one produces final consumption goods and the other produces investment or physical capital goods. Our analysis of the working of this creative region leads to three results. First, we derive an analytic expression that links the growth rate of the relative price of physical capital goods to the growth rate of physical capital in the consumption goods sector. Second, we highlight the connection between the growth rates of consumption and that of physical capital in the consumption goods sector. Finally, we analyze the effect that the taxation of investment income has on the equilibrium growth rate of consumption in our creative region.

Can hazardous waste supply chain ‘hotspots’ be identified using an input–output framework?

The paper examines a method to attribute hazardous waste streams to regional production and consumption activity, and to connect these same waste streams through to different management options. We argue that a method using an input–output framework provides useful intelligence for decision makers seeking to connect elements of the management of the hazardous waste hierarchy to production and to different patterns and types of final consumption (of which domestic household consumption is one). This paper extends application of conventional demand driven input–output attribution methods to identify hazardous waste ‘hotspots’ in the supply chains of different final consumption goods and consumption groups. Using a regional case study to exposit the framework and its use, we find that domestic government final consumption of public administration production indirectly drives hazardous waste generation that goes to landfill, particularly in the domestic construction and sanitary services sectors, but also in the manufacture of wood products.

The Role of Value Added Tax on Economic Growth of Ethiopia

The achievement of economic growth is crucial for countries sustainable development. Recently, Value Added Tax (VAT) becomes a major worldwide tax instrument which enhances economic growth. Being a tax levied on the final consumption of goods and services, VAT is collected at each stage of production and distributions when value is added up on them. In Ethiopia, the adoption of VAT to replace the out dated general sales tax as of January 2003 becomes the central landmark tax reform. Accordingly, it has introduced a uniform standard rate of 15% VAT system on most of goods and services. Thus, this paper analyses the role of VAT on economic growth of Ethiopia from 2003 to 2012 based on theoretical and empirical evidences. To meet this objective, time series macro-economic data on GDP, VAT, total tax revenue excluding VAT, non-tax revenue and foreign revenue were used. This data is collected from Ministry of Finance and Economic Development, Ethiopian Economic Associations and Ethiopian Revenue and Customs Authority. Descriptive statistics and multiple regressions were employed to analyze the data. The finding of the study reveals that as compared to sales tax, VAT boosts the general economic growth of Ethiopia but the issue of regressively resembling to sales tax still continues. During the periods under review, the growth rate of VAT was 66.27% on average. For the periods of sales tax, the average growth rates of GDP were only 2.53%. However after executions of VAT, such growth rate reached about 21.9% on average. The analysis also showed as the average ratio of VAT to GDP becomes 2.95%. The finding also reveals that, VAT, total tax revenue and non-tax revenue except foreign revenue were significant at 5% level of significance but all of them positively contributed for economic growth during the periods under review. However, to be effective, it requires strong administrations and cooperation’s of the tax payers with taxing authority and the government in general.

The water footprint of modern consumer society

Water is not only used in the domestic context, but also in agriculture and industry in the production of commercial goods, from food to paper. The water footprint is an indicator of freshwater use that looks at both direct and indirect use of water by a consumer or producer. The water footprint of an individual, community or business is defined as the total volume of freshwater that is used to produce the goods and services consumed by the individual or community or produced by the business. This book shows how the water footprint concept can be used to quantify and map the water use behind consumption and how it can guide reduction of water use to a sustainable level. With a number of case studies, it illustrates water use along supply chains and that water consumption at one place is often linked to water use at another. For example, it is calculated that it takes 15,000 litres of water to produce 1 kg of beef, or 8,000 litres of water to produce a pair of jeans. The book shows that imports of water-intensive products can highly benefit water-scarce countries, but also that this creates a dependency on foreign water resources. The book demonstrates how water-scarce regions sometimes, nevertheless, use lots of water for making export products. It raises the issue of sustainable consumption: how can consumers, businesses and governments get involved in reducing the water footprints of final consumer goods?

Inflation dynamics in open economies: Empirical evidence for G7 countries on the role of import prices and the cost channel

The supply side effects of both the nominal interest rate (i.e., the cost channel) and import prices on inflation are very important for the design of monetary policy. However, the empirical identification of the cost channel (traditionally associated with the advance payment of wages) has ignored import prices. We start by deducting a New Keynesian Phillips Curve (NKPC) which shows that ignoring import prices in the estimation of the cost channel may lead to incorrect results. Taking this into account, we study the empirical relevance of the cost channel and import prices using the NKPC for the G7 countries. We test whether the estimation of the cost channel is affected when the price of imported inputs is considered; if it is relevant to extend the cost channel given that imports of final consumption goods are also paid in advance; if imports should be treated as inputs and/or consumption goods, and if there is an immediate or slow exchange rate pass-through. Empirical results indicate that the cost channel is present in imported consumption goods in particular, and import prices play an important role in explaining inflation dynamics.

Is Monetary Policy in an Open Economy Fundamentally Different?

Openness requires optimal monetary policy to deviate from the canonical closed economy principle of domestic price stability, even if domestic prices are the only ones to be sticky. The paper reviews this argument using a simple partial equilibrium analysis in an economy that trades in final consumption goods. It then extends the standard open economy New Keynesian model to include imported inputs of production. Production openness strengthens even further the incentive for the policymaker to deviate from strict domestic price stability. With both consumption and production openness, variations in the world price of food and in the world price of imported oil act as exogenous cost-push factors.

Carbon and Materials Embodied in the International Trade of Emerging Economies

SummaryProduction in emerging economies, such as Brazil, Russia, India, China, South Africa, and Argentina (BRICSA), increased substantially over the past two decades. This is, on the one hand, due to growing domestic demand within these countries, and, on the other hand, due to a deepened international division of work. Global trade linkages have become denser and production chains are no longer restricted to only one or two countries. The volume of international trade in intermediate inputs as well as final consumption goods has tripled in the past two decades. With this, carbon dioxide (CO2) emissions and materials embodied in traded goods have increased, making it increasingly difficult to identify the actual causes of emissions and material extractions, as producing and extracting countries are not necessarily consuming the resulting goods. Using the multiregional input‐output Global Resource Accounting Model (GRAM), this article shows how global carbon emissions and materials requirements are allocated from producing/extracting countries to consuming countries. It thereby contributes to the rapidly growing body of literature on environmental factors embodied in international trade by bringing two key environmental categories—CO2 emissions and materials—into one consistent and global framework of analysis for the first time. The results show that part of the increase in carbon emissions and materials extraction in BRICSA is caused by increasing amounts of trade with countries in the Organisation for Economic Co‐operation and Development as well as a growing demand for goods and services produced within BRICSA.