Can the Post-COVID FDI Boost the Indian Economy?

Ever since the liberation of trade policies in India, Foreign Direct Investments (FDI) has been crucial in the growth of the economy, both at the macro as well as sector level. The association between FDI and economic growth is an area of interest globally. The investment decisions are affected by several national and international events that add to the volatility of the number of inflows. COVID-19 pandemic severely impacted the intensity of FDI inflows. But the strong resilience by our government manifested in crucial policy reforms and proactive decision-making minimized the impact. This article examines the potential impact of FDI on crucial macroeconomic variables using the Computable General Equilibrium (CGE) Model. Introducing the policy shock of $90 billion into the model, an increase of 5.68% per annum in GDP is estimated. Findings indicate that the impact of FDI shall be favourable to a large number of sectors mainly metals, construction, motor vehicle, computers, and electronics in terms of increased output, exports, and employment opportunities. The study offers logical implications for the policymakers to continue strengthening their moves to attract FDI.

How does fiscal austerity impact on poverty and inequality? The Spanish case

The aim of this paper is contributing to fill the gap between the macroeconomic effects of policy reforms and the microeconomic and social ones, considering simultaneously both kind of impacts. Regarding fiscal adjustments, concern about the sustainability of public deficit and debt resulting from the Great Recession led governments to adopt austerity measures in most European countries. Our analysis considers the redistributive effects of such adjustments for the Spanish economy by simulating a hypothetical reduction of public deficit and distinguishing between spending cuts and tax hikes. In terms of analytical approach, a Computable General Equilibrium (CGE) model and a microsimulation model are integrated to include the general equilibrium effects of these measures as well as the effects on income distribution. The results contribute to the growing but limited literature on the distributional effects of fiscal consolidations by showing that policymakers have to choose between more inequality or more poverty.

Impact of COVID-19 on the US and Texas Economy: A General Equilibrium Approach

This paper examines the impact of COVID-19 on the US and Texas economy using a computable general equilibrium model, REMI PI+. We consider three scenarios based on economic forecasts from various sources, including the University of Michigan’s RSQE (Research Seminar in Quantitative Economics), IMF, and the Wi orld Bank. We report a GDP loss of $106 million (a 6% decline) with 1.2 million jobs lost (6.6%) in Texas in 2020. At the national level, GDP loss is $996 billion (a 5% decline) with 11.5 million jobs lost (5.5%) in the same year. By 2026, the aggregate total GDP loss in Texas ranges from $378 to $629 million. The estimated unemployment rate in Texas in 2021 ranges from 5% to 7.7%, depending on modeling assumptions. The granularity of the CGE results allow examination of the most and least impacted industries. Health Care and Social Assistance, Construction, and Accommodation and Food Services incur the most job loss while State and Local Government and Farm will likely see an increase in jobs for 2020. These insights separate our work from most current impact studies.

Employment and income implications of transitions towards more sustainable global diets

The effect of global diet shifts on human health, the natural environment, and the financial cost of obtaining food has been extensively quantified. The current study complements these quantifications by examining the economy-wide consequences of global diet shifts. We used a computable general equilibrium model to quantify the changes in employment and income in all geographic regions of the globe in the year 2050 under a global shift towards more sustainable human diets. These more sustainable diets are lower in livestock-derived foods, higher in fruit and vegetables, and lower in refined sugar than diets under the current trajectory for food demand out to the year 2050. Our results show that transitioning towards more sustainable diets at the global scale in sub-Saharan Africa will decrease employment in the livestock sector and increase employment in the crop sector, with an overall reallocation of labor from the industry and services sectors to the agriculture sector. West Africa was the region of the globe that encountered the greatest decline in income of 14% as a result of the global diet shift, driven by the reallocation of labor into the lower value-added agriculture sector and driven by West Africa’s high share of total household expenditure spent on food. These findings have important implications for understanding trade-offs and developing strategies to equitably improve livelihoods within the broader context of food system transformation.

Evaluation of Transport and Location Policies to Realize the Carbon-Free Urban Society

The Japanese Government has declared that it will become carbon-free by 2050. Urban planning to realize a carbon-free society is proposed in the context of urban transport policy, which are policies to agglomerate urban facilities and link among them by public transport. However, transport and location policies to regulate land use are afraid to generate an economic loss. It is important to evaluate not only the effects of reducing GHG emissions but also economic influence. In this paper, we built the Computable General Equilibrium and Urban Economic (CGEUE) model, which modeled the transport and location behavior of each economic agent for a detailed area explicitly. We evaluated some transport and location policies such as (1) conversion from fossil fuel vehicles to electric vehicles, (2) improvement of public transport, (3) environmental tax and (4) making city compact by using the CGEUE model. As a result, it can be concluded that the combination policy of improving the public transport policy and environmental tax is the most effective under the conditions of these simulation results.

Forest succession, management and the economy under a changing climate: coupling economic and forest management models to assess impacts and adaptation options

Climate change is expected to have significant impacts on forests by affecting the successional dynamics of tree species and the performance of plantations, among others. Research is needed to better understand how these factors will affect forests and economies in different regions, and how we can best adapt. To shed some light on these issues, we couple an economic (Computable General Equilibrium) model with a forest management (Woodstock) model to analyze the potential climate change impacts and adaptation options on timber supply and the economy over the 2015-95 period in a case-study province of New Brunswick, Canada. We estimate that climate change may have relatively large negative impacts on softwood timber supply (at 26% by 2095), softwood forestry & logging sector output quantity (at 12% by 2095), and softwood-dependent forestry manufacturing sector output (ranging from 6% to 27% by 2095). Negative impacts on GDP may be relatively smaller (at up to a 0.33% reduction by 2095). Adapting to these climate-related changes by planting drought-resistant softwood seedlings or hardwood seedlings in place of failed softwood plantations can reduce these negative impacts. While the former adaptation option is supported using cost-benefit analysis, the latter is not – due to the large incremental costs of growing, planting, and tending hardwood seedlings. Methods developed in this study can be applied in other regions to help guide decision-making around forest management in the face of a changing climate.

Regional responses to macroeconomic and regional policy in Poland

PurposeThe purpose of this paper is to investigate regional impact of macroeconomic and regional policy impulses, using our newly developed multi-regional computable general equilibrium (CGE) model for three, structurally distinctive Polish macro-regions.Design/methodology/approachIn this study, we build an interregional social accounting matrix for Poland and use it to develop a small scale, three-region CGE model, reflecting the size of regional economies and cross-regional differences in industrial structures, while also explicitly accounting for the dynamics of main economic relationships across regions, such as interregional flows in commodities, labor and capital. The model is subsequently use to simulate regional effects of various policy impulses.FindingsWe demonstrate important cross-regional differences in the transmission mechanism of macro-level policies, which either affect regional output and its individual components (as in the case of imposing shocks to VAT or PIT rates) or are limited to the components, while preserving a rather uniform impact on output (as in the case of imposing shocks to wages). Furthermore, we contribute to the regional policy equity-efficiency trade-off debate, by illustrating quantitatively how, due to structural differences, spatially targeted expenditure measures might promote either regional convergence or aggregate output growth at the country-level.Originality/valuePrior to our study, regional CGE models have not been used to simulate spatial distribution of aggregate shocks in Poland or in any other CEE country. Another originality of our study lies in comprehensive evaluation of various policy impulses, from the perspective of their impact on the respective region, spillovers to the other regions and its overall, country-level effect.

Impact of COVID-19 on Saudi Arabia's economy: evidence from macro-micro modelling

PurposeEven with the Saudi Arabian Government's discretionary measures to mitigate the spread of the coronavirus disease 2019 (COVID-19), the economic sectors were not spared from the damage. Thus, the paper aims to use a computable general equilibrium (CGE) model to evaluate the impact of COVID-19 on the Kingdom of Saudi Arabia's (KSA) economy, with a special focus on small and medium enterprises (SMEs) and production. These influence the level of poverty.Design/methodology/approachThe paper adopted the social accounting matrix (SAM) for Saudi Arabia built in 2021 by Imtithal Althumairi from Saudi Arabia's 2017 SAM. The model represents a snapshot of the economy and different flows that exist within the tasks and institutions. Two simulations (mild and severe) were conducted because of the focus on the distributional outcomes.FindingsDecrease in job creation and economic growth were significant evidence from the study's findings. Findings show that more families hit below the poverty line because the negative impacts of the pandemic have shifted the income allocation curve. Findings show that the weakest of the poor are mitigated by government social grants during the pandemic.Research limitations/implicationsThe paper is restricted to the relevant literature relating to the impact of COVID-19 on Saudi Arabia's economy and evaluated using the SAM model. Moreover, the COVID-19 is still an ongoing scenario; thus, the model should be updated as data utilised for the operationalisation are made available.Practical implicationsThe information from the suggested model can be suitable to measure the degree of the harm, and thus, the likely extent of the desirable policy feedback. Also, the model can be updated, as data are made available and formulated policies based on the updated data implemented by the policymakers.Originality/valueApart from the recovery planning of SMEs during the pandemic, the paper intends to stir up Saudi Arabia's policymakers through the macro-micro model to recovery planning and resilience of the economy with emphasis on mitigating unemployment.