scholarly journals When the Treasury and its Models Seize Power

2016 ◽  
Vol 11 (1) ◽  
Author(s):  
Jesper Jespersen
Keyword(s):  
Fiscal Policy ◽  
General Equilibrium ◽  
Equilibrium Model ◽  
Structural Model ◽  
General Equilibrium Model ◽  
Social Constructs ◽  
Model Set ◽  
Institutional Status ◽  
Empirical Tests ◽  
Set Up

This paper explains how short- and medium-term macroeconomic projections are undertaken within the Danish Ministry of Finance (DMF) by the use of an annual macroeconometric model, ADAM, together with a theoretical, structural general equilibrium model, DREAM. DREAM is used to calculate the structural public sector budget deficit, which by law is required never to exceed ½ percent of GDP. This legal restriction on fiscal policy gives the structural model (and the ‘model-operators’) a hitherto unseen political power. This ‘institutional’ status of DREAM causes a number of questions about democracy to be asked. First, why has an elected government accepted to surrender its legal right to undertake an active fiscal policy? Secondly, how can it be that DREAM – a neoliberal general equilibrium model without proper empirical tests and operated by anonymous civil servants – has been elevated to a position akin to a high court’s? The paper demonstrates how this model set-up within the DMF reproduces reality poorly. Therefore, these models should rather be seen as social constructs predetermined be neoclassical/neoliberal economic theory, which has to be acknowledged as a democratic challenge.

scholarly journals The Impact of the Fiscal Policy on Income and the Consumption of the Poor Households in Morocco: An Analysis with a Computable General Equilibrium Model (CGEM)

2017 ◽  
Vol 9 (4) ◽  
pp. 79
Author(s):  
El Moussaoui Mohamed ◽  
Mohamed Karim
Keyword(s):  
Fiscal Policy ◽  
General Equilibrium ◽  
Equilibrium Model ◽  
Computable General Equilibrium ◽  
Computable General Equilibrium Model ◽  
General Equilibrium Model ◽  
The Other ◽  
The Poor ◽  
Poor Households ◽  
The Impact

This article examines the effects of the fiscal policy on income and the consumption of the poor households in urban and rural areas. The evaluation of this impact is carried out by the use of a real and static Computable General Equilibrium Model (CGEM) in open economy and with government. The Social Accounting Matrix of the year 2013 is used for the supposed simulations.The results obtained show clearly that 50% direct tax reduction in income for the urban poor households and 100% for the rural ones make it possible to increase significantly the disposable income of these households as well as improving their consumption. On the other hand, the other policies such as exempting the agricultural and food commodities from the indirect tax, combined with 20% increase in this tax for the industrial products and the private services, or the exemption of the agricultural and food products from the customs duties, do not have a positive effect on the income and the consumption of the poor households.

scholarly journals Unraveling the Exogenous Forces Behind Analysts' Macroeconomic Forecasts

2021 ◽  
Author(s):  
Marcela De Castro-Valderrama ◽  
Santiago Forero-Alvarado ◽  
Nicolás Moreno-Arias ◽  
Sara Naranjo-Saldarriaga
Keyword(s):  
Business Cycles ◽  
General Equilibrium ◽  
Equilibrium Model ◽  
Structural Model ◽  
General Equilibrium Model ◽  
The Future ◽  
Endogenous Variables

Modern macroeconomics focuses on the identification of the primitive exogenous forces generating business cycles. This is at odds with macroeconomic forecasts collected through surveys, which are about endogenous variables. To address this divorce, our paper uses a general equilibrium model as a multivariate filter to infer the shocks behind market analysts' forecasts and thus, unravel their implicit macroeconomic stories. By interpreting all analysts' forecasts through the same lenses, it is possible to understand the differences between projected endogenous variables as differences in the types and magnitudes of shocks. It also allows to explain market's uncertainty about the future in terms of analysts' disagreement about these shocks. The usefulness of the approach is illustrated by adapting the canonical SOE semi-structural model in Carabenciov et al. (2008a) to Colombia and then using it to filter forecasts of its Central Bank's Monthly Expectations Survey during the COVID-19 crisis.

Comments on "Shadow Pricing and Macroeconomic Analysis: Some Illustrations from Pakistan" by Squire et al.

1979 ◽  
Vol 18 (2) ◽  
pp. 113-115
Author(s):  
T. N. Srinivasan
Keyword(s):  
General Equilibrium ◽  
Equilibrium Model ◽  
General Equilibrium Model ◽  
Equilibrium Analysis ◽  
Partial Equilibrium ◽  
Shadow Prices ◽  
Essential Point ◽  
Economic Issues ◽  
Shadow Pricing ◽  
Extreme Sensitivity

The paper is too long for conveying the message that shadow pricing used as a method of analysis in micro-economic issues of project selection is also useful for analysing macro-economic issues, such as foreign and domestic borrowing by the government, emigration, etc. Much of the methodological discussion in the paper is available in a readily accessible form in several publications of each of the coauthors; In contrast, the specific application of the methodology to Pakistani problems is much too cavalier. While it is hard to disagree with the authors' claim that shadow pricing "constitutes a relatively informal attempt to capture general equilibrium effects" (p. 89, emphasis added), their depiction of traditional analysis is a bit of a caricature: essentially it sets up a strawman to knock down. After all in the traditional partial equilibrium analysis, the caveat is always entered that the results are possibly sensitive to violation of the ceteris paribus assumptions of the analysis, though often the analysts will claim that extreme sensitivity is unlikely. Analogously, the shadow pricing method presumes "stationarity" of shadow prices in the sense that they are “independent of policy changes under review" (p. 90). The essential point to be noted is that the validity of this assertion or of the "not too extreme sensitivity" assertion of partial equilibrium analysts can be tested only with a full scale general equilibrium model! At any rate this reviewer would not pose the issue as one of traditional partial equilibrium macro-analysis versus shadow pricing as an approximate general equilibrium analysis, but would prefer a description of project analysis as an approach in which a macro-general equilibrium model of a manageable size (implicit or explicit) is used to derive a set of key shadow prices which are then used in a detailed micro-analysis of projects.

Is the RCEP a Cornerstone or Just Collaboration? Regional General Equilibrium Model Based on GAMS

2020 ◽  
Vol 24 (1) ◽  
pp. 171-207
Author(s):  
Yosri Nasr Ahmed ◽  
Huang Delin ◽  
Benito Giovanni Reeberg ◽  
Victor Shaker
Keyword(s):  
General Equilibrium ◽  
Equilibrium Model ◽  
General Equilibrium Model ◽  
Model Based
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