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 Study of the Impact of the Growth of Private Consumption and Wages on Inflation in Bulgaria

2021 ◽  
Vol 27 (1) ◽  
pp. 64-74
Keyword(s):  
Open Economy ◽  
Private Consumption ◽  
Raw Materials ◽  
Small Open Economy ◽  
External Factors ◽  
International Prices ◽  
The Impact

In Bulgaria, as a country with a small open economy, external factors such as international prices of oil, food, raw materials and others have a serious impact on inflation; many other factors such as the growth of private consumption, wages and others have an impact as well. The purpose of the article is to examine the extent to which the growth of private consumption and wages contribute to inflation in our country. These two variables have the strongest impact on inflation in services, as many services in the economy cannot be imported from the outside world.

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.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

Economic Growth and Foreign Workers in ASEAN and Singapore

2012 ◽  
Vol 11 (3) ◽  
pp. 114-136 ◽  
Author(s):  
Shandre Mugan Thangavelu
Keyword(s):  
Open Economy ◽  
Wage Gap ◽  
Small Open Economy ◽  
Output Growth ◽  
Foreign Workers ◽  
Domestic Economy ◽  
Unskilled Workers ◽  
Market Trends ◽  
State Growth ◽  
The Impact

This paper studies the trends of foreign immigrants in Asia and their effect on the growth of the Singapore economy. The paper also discusses the key labor market trends and the rationale for foreign workers in a small open economy like Singapore. Further, the paper highlights key simulations of the impact of foreign immigrants on output growth and wage gap for the Singapore economy by using Thangavelu's (2011) dynamic general equilibrium model. The study accounts for the flow of skilled and unskilled foreign workers on (a) steady-state growth; (b) the wage gap between the skilled and unskilled workers; and (c) innovation capabilities of the domestic economy. Further, the model also accounts for the contribution of immigrants on the welfare of the domestic economy through the immigration surplus that will accrue to the domestic economy.

scholarly journals Sustainability of Extraction of Raw Material by a Combination of Mobile and Stationary Mining Machines and Optimization of Machine Life Cycle

2020 ◽  
Vol 12 (24) ◽  
pp. 10454
Author(s):  
Katarína Teplická ◽  
Martin Straka
Keyword(s):  
Life Cycle ◽  
Raw Materials ◽  
Simulation Method ◽  
Raw Material ◽  
Optimal Distribution ◽  
Transport Costs ◽  
Scientific Discussion ◽  
Mining Companies ◽  
Conveyor Belts ◽  
The Impact

This article summarizes the arguments within the scientific discussion on the issue of using mining machines and their life cycle. The main goal of the article is to investigate the impact of a combination of mobile and stationary mining machines and their optimal distribution in the mining process to increase the efficiency of mining and processing of raw materials. The following methods of research were focused on the use of technical indicators for the valuation efficiency of the mining process: a simulation method was used for the distribution of mining machines, comparison analysis was used for the real and past state of mining machines, and a decision tree was used as managerial instrument for optimal alternatives of mining machines. The research empirically confirms and theoretically proves that optimal distribution of mining machines and machine parks is very important for mining companies. The benefit of this research for the mining company was the new location of the machines and the combination of stationary production lines and mobile equipment. The optimal layout of the machines reduced the number of conveyor belts and improved the transfer of limestone processing to mobile devices, saving time, which was reflected in transport costs. The results can be useful for other mining companies seeking to create an optimal machine park.

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.

scholarly journals Mutual Fund Performance and the Impact of Superannuation and Financial Regulation

2018 ◽  
Author(s):  
James M. Cooper ◽  
Russell Gregory-Allen
Keyword(s):  
New Zealand ◽  
Mutual Funds ◽  
Open Economy ◽  
Mutual Fund ◽  
Financial Regulation ◽  
Positive Impact ◽  
Small Open Economy ◽  
Fund Industry ◽  
Mutual Fund Industry ◽  
The Impact

Financial innovation such as a new superannuation scheme can allow for broader participation in retirement savings by individuals, but might also impact existing investments. On the other hand, mutual fund regulation involves a balancing act between protecting investors, and allowing fund managers to exercise their skills. Some recent changes in the fund environment of New Zealand allows an examination of the impact on performance from those changes in a small, open economy. Using a sample of New Zealand mutual funds, we compared performance before and after the introduction of two significant changes in the financial environment of New Zealand. In 2007, a state-sponsored investment scheme called KiwiSaver was introduced, providing significant incentives for more and more New Zealanders to save. Participation was substantial, and by 2015 KiwiSaver funds under management had exceeded traditional open-end funds. At the time of KiwiSaver’s introduction, mutual fund regulations was quite lax, particularly in the area of financial disclosure. However, in 2013 a new law was introduced, substantially increasing the disclosure requirements for those funds participating in the KiwiSaver scheme. First we examined, the impact on the New Zealand mutual fund industry upon the introduction of KiwiSaver, and then on the introduction of the increased KiwiSaver regulations, in order to determine if these harmed the overall New Zealand mutual fund industry. We found that the New Zealand mutual funds which focused on New Zealand or Australian equities experienced some negative performance after the introduction of KiwiSaver, but the impact on the overall industry was not significant. We also found that the increased regulations had some positive impact on performance, particularly for those funds emphasising global equities.  

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