scholarly journals Fossil Fuel Subsidy Reform in the Developing World: Who Wins, Who Loses, and Why?

2018 ◽  
Vol 35 (2) ◽  
pp. 180-203 ◽  
Author(s):  
Ian Coxhead ◽  
Corbett Grainger
Keyword(s):  
Developing Countries ◽  
Open Economy ◽  
Computable General Equilibrium ◽  
Fossil Fuel ◽  
Empirical Studies ◽  
Small Open Economy ◽  
Analytical Models ◽  
Energy Prices ◽  
Goods And Services ◽  
Subsidy Reform

Fossil fuel subsidies are widespread in developing countries, where reform efforts are often derailed by disputes over the likely distribution of gains and losses. The impacts of subsidy reform are transmitted to households through changes in energy prices and prices of other goods and services, as well as through factor earnings. Most empirical studies focus on consumer expenditures alone, and computable general equilibrium analyses typically report only total effects without decomposing them by source. Meanwhile, analytical models neglect important open-economy characteristics relevant to developing countries. In this paper, we develop an analytical model of a small open economy with a preexisting fossil fuel subsidy and identify direct and indirect impacts of subsidy reform on real household incomes. Our results, illustrated with data from Viet Nam, highlight two important drivers of distributional change: (i) the mix of tradable and nontradable goods, reflecting the structure of a trade-dependent economy; and (ii) household heterogeneity in sources of factor income.

On the First-Round Effects of International Food Price Shocks

2018 ◽  
Author(s):  
Rafael Portillo ◽  
Luis-Felipe Zanna
Keyword(s):  
Developing Countries ◽  
Open Economy ◽  
Small Open Economy ◽  
Food Price ◽  
Relative Price ◽  
Asset Market ◽  
Price Shocks ◽  
Market Structures ◽  
Model Features ◽  
Food Share

The chapter presents a small open-economy model to study the first-round effects of international food-price shocks in developing countries. First-round shocks are defined as changes in headline inflation that, holding core inflation constant, help implement relative price adjustments. The model features three goods (food, a generic traded good, and a non-traded good), varying degrees of tradability of the food basket, and alternative international asset market structures. First-round effects depend crucially on the asset market structure. Under complete markets, inter-temporal substitution prevails, making the inflationary impact of international food price shocks proportional to the food share in consumption, which in developing countries is typically large. Under financial autarky, the income channel is dominant, and first-round effects are instead proportional to the country’s food trade balance, which is typically small. The results cast some doubt on the view that international food price shocks inherently have large inflationary effects in developing countries.

scholarly journals COMPETITIVENESS OF THE REGION AS A TRANSFORMATION BASIS FOR THE ECONOMY OF THE REPUBLIC OF KAZAKHSTAN

THE BULLETIN ◽  
2020 ◽  
Vol 5 (387) ◽  
pp. 219-225
Author(s):  
Zh. Z. Arynova ◽  
◽  
A. Т. Abdykarimov ◽  
M. К. Zhetpisbayeva ◽  
Z. A. Salzhanova ◽  
...  
Keyword(s):  
Open Economy ◽  
Small Open Economy ◽  
Evaluation Criteria ◽  
The State ◽  
Special Role ◽  
Economic Relations ◽  
Goods And Services ◽  
Strategic Direction ◽  
Stage Of Development ◽  
The Republic

. In the era of globalization, the development of countries with a small open economy largely depends on the intensity of using various forms of international economic relations, among which the competitiveness of each country plays a special role. At the present stage of development, the problem of competitiveness is central to the economic policy of the state. Creating competitive advantages over an opponent becomes a strategic direction of the state and its bodies and applies to all levels of the hierarchy: products (goods and services), enterprises, industries, regions and the country as a whole, but the country's competitiveness is of particular importance. The competiti-veness of the region is determined in comparison with other similar facilities. This characteristic refers to estimated indicators, therefore, it assumes, along with the subject and subject of the assessment, the presence of certain criteria. Evaluation criteria (goals) may be the market position, the pace of development, the ability to pay for the borrowed funds received, consumer properties in relation to the price of the goods, etc.

Monetary and fiscal policy effects in South African economy

2020 ◽  
Vol 11 (4) ◽  
pp. 625-638 ◽  
Author(s):  
Naser Yenus Nuru
Keyword(s):  
South Africa ◽  
Fiscal Policy ◽  
Open Economy ◽  
Empirical Studies ◽  
Small Open Economy ◽  
Empirical Literature ◽  
Impulse Response Functions ◽  
Content Type ◽  
Joint Effects ◽  
Monetary And Fiscal Policy

PurposeThe main purpose of this study is to see the macroeconomic effects of monetary and fiscal policy shocks in South Africa.Design/methodology/approachThe joint effects of monetary and fiscal policy are analyzed by applying short-run contemporaneous restrictions for the identification of shocks in an SVAR in order to derive impulse response functions. Hence, a general AB model of (Amisano and Giannini, 1997) identification scheme, which is not recursive, is employed in this study.FindingsThe author shows that monetary tightening leads to a fall in real economic activity and depreciates the exchange rate. And in regard to the fiscal policy, the author calculates an initial government spending multiplier of 0.20, which later peaks at 0.40. The tax multiplier is almost 0 on impact and statistically insignificant. However, the author finds evidence supporting the existence of accommodative stance between monetary policy and fiscal policy, which is important for economic and political decision-making.Originality/valueEmpirical studies that deal with the joint effects of monetary and fiscal policy for South Africa through the SVAR framework are quite limited. This paper, therefore, contributes to the empirical literature on the effects of monetary and fiscal policy in a small open economy like South Africa.

scholarly journals Does Saving Really Matter For Growth In Developing Countries? The Case Of A Small Open Economy

2010 ◽  
Vol 9 (4) ◽  
Author(s):  
Olajide S. Oladipo
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Causal Relationship ◽  
Open Economy ◽  
Small Open Economy ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Complementary Role ◽  
Toda And Yamamoto

The study employed the Toda and Yamamoto (1995) and Dolado and Lutkepohl (1996) –TYDL methodology to uncover the direction of causal relationship between savings and economic growth in Nigeria between 1970 and 2006. The empirical results suggest that savings and economic growth are positively cointegrated, indicating a stable long-run equilibrium relationship. Further, the findings revealed a unidirectional causality between savings and economic growth and the complementary role of FDI in growth.

scholarly journals External Shocks in a Small Open Economy: A CGE - Microsimulation Analysis

2010 ◽  
Vol 15 (1) ◽  
pp. 45-90 ◽  
Author(s):  
Vaqar Ahmed ◽  
Cathal O’Donoghue
Keyword(s):  
Open Economy ◽  
Computable General Equilibrium ◽  
Raw Materials ◽  
Small Open Economy ◽  
Foreign Assistance ◽  
Raw Material ◽  
Wage Labor ◽  
Import Prices ◽  
External Balance ◽  
The Impact

This paper studies the impact of changes in the external balance of Pakistan. We explain why the economic growth achieved during the past decade was highly dependent on improvements in the external balance. Between 2001 and 2007, Pakistan benefited from an increase in remittances, foreign assistance from bilateral and multilateral sources, and a relatively stable exchange rate. After 2007, this performance came under pressure from external price shocks. The rise in the import prices of petroleum, raw materials and other manufactured goods has the potential to reduce the country’s growth performance, impacting the competitiveness of the economy and threatening the gains achieved during past years. We integrate a computable general equilibrium (CGE) model with a microsimulation model to study the effects of changes in foreign savings and import prices faced by Pakistan. An increase in foreign savings leads to an increase in imports and a decrease in exports. The main sectors facing a decline in exports are textiles, leather, cement, and livestock. In this simulation food and oil prices decline and the factors of production that gain are agricultural wage labor and nonagricultural unskilled wage labor. The increase in import prices of petroleum or industrial raw material leads to a reduction in exports. In this simulation the crop sector is negatively impacted and returns to land and profits to farm owners increase, showing a change in favor of agricultural asset owners, while poverty and inequality increase.

scholarly journals Macroeconomic and environmental consequences of circular economy measures in a small open economy

2021 ◽  
Author(s):  
J. Brusselaers ◽  
K. Breemersch ◽  
T. Geerken ◽  
M. Christis ◽  
B. Lahcen ◽  
...  
Keyword(s):  
Fiscal Policy ◽  
Open Economy ◽  
Circular Economy ◽  
Computable General Equilibrium ◽  
Small Open Economy ◽  
Computable General Equilibrium Model ◽  
Fiscal Policies ◽  
Policy Makers ◽  
Environmental Consequences ◽  
The Impact

AbstractThis paper investigates the economy-wide impact of the uptake of circular economy (CE) measures for the small open economy (SOE) of Belgium, in particular the impact of fiscal policies in support of lifetime extension through repair activities of household appliances. The impact assessment is completed by means of a computable general equilibrium model as this allows quantification of both the direct and indirect economic and environmental impact of simulated shocks. The results show that different fiscal policy types can steer an economy into a more circular direction. However, depending on the policy type, the impact on the SOE’s macroeconomic structure and level of circularity differs. Furthermore, common claims attributed to a CE (e.g. local job creation or decreased import dependence) can be, but are not always, valid. Hence, policy-makers must prioritize their most important macroeconomic goals and opt for an according fiscal policy. Finally, this paper finds that the CO2 equivalent emissions calculated from a production (or territorial) perspective increase, while they decrease from a consumption perspective. This is explained by the substitution of international activities by local circular activities. This comparative analysis advocates for the consumption approach to assess the CE’s impact on CO2 equivalent emissions.

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