A small open economy model applied to an evaluation of Canadian energy policies using 1980 data

This paper describes an applied general equilibrium model for policy evaluation in the small open price-taking economy case. We use the approach to analyze the effects of Canadian energy price policies. The net outcome in terms of national welfare depends on two separate effects. Consumer and producer prices set below world prices result in over-consumption and under-production of energy, and welfare loss. Producer prices of energy set below world prices reduce the factor returns accruing to owners of resources in Canada, many of whom are foreigners. Our results portray the rent transfer effect against foreigners as the dominant effect of these policies. Removing price controls is a nationally welfare worsening change, since the increased rents transferred to foreigners more than outweigh the welfare gain.     

Welfare State Developments in the Russian Federation: Oil-led Social Policy and 'The Russian Miracle'

This article investigates the main welfare state developments of the Russian Federation that have occurred since the fall of communism. It argues that the contemporary welfare expansion strictly depends on high oil and gas prices, and that this oil-led social policy makes the future of the 'Russian miracle' highly volatile. The main conclusion is that the Russian welfare state will be able to function properly and to ensure social integration and solidarity only under conditions of sustained oil-led growth. The article also identifies a variety of different, but equally important, endogenous, as well as exogenous, factors that have influenced the social policy developments in the Russian Federation since 1989. These correspond to the existence of few veto points present in the political arena, the lack of a well-structured system of interest representation, the presence of informality in the welfare state organization, but also to the presence of national economic vulnerabilities and/or strengths in the now open global economy, as well as to non-contingent decisions taken in strategic sectors of the state, such as those related to the energy or defence sectors.     

Imperfect competition,border protection and consumer boycott: The future of the dairy industry in Israel

Recent increases in prices of dairy products in Israel led to consumer unrest and boycotts against dairy producers during the summer of 2011. The Israeli dairy industry is highly distorted with production quotas and administered prices for raw milk, tariff rate quotas and an oligopoly in dairy processing. Since the issue of self-sufficiency and food security is at the top of Israel's national priorities, the future of the dairy industry is generating heated debate. Thus, we use a general equilibrium model to estimate the effects associated with particular alternative policies actually discussed to liberalize the Israeli dairy industry.     

Measuring the economic impacts of recent oil price shocks on oil-dependent economy: evidence from Malaysia

This paper examines the economy-wide impacts of recent oil price shocks on the Malaysian economy. To achieve this objective, an integrated methodological framework that combines econometric and input–output models is utilized to assess the impacts of an oil price shock on tax revenues, employment, labor income and gross domestic product (GDP). Our results reveal that the recent oil price shocks significantly affects these macroeconomic variables. The decline in oil prices from 2015 to 2016 reduces tax revenues by 10.5%, lower GDP by 1.9% and increases the unemployment rate by 0.3%. As such, the sharp crunch in oil prices serves as a reminder to policymakers on the vulnerability inherent in overreliance on oil exports and the urgent need to diversify the economy.     

韩国社会福利法人组织的运作模式研究

在韩国,提供社会福利服务的主体是公共部门和民间部门。公共部门的主体是中央和地方政府,民间部门包括个人、社会福利法人、宗教团体、志愿者团体等。在民间部门中起主导作用,处于核心地位的是社会福利法人组织。在社会福利法人中,国家资源和民间资本结合在一起,共同承担着增进国民福利的责任。本文主要分析韩国社会福利法人的特征,考察韩国社会福利法人发展现状和运营模式,探讨社会福利法人发展过程中存在的问题及改善方案。     

Difficult decisions on care and services for elderly people: the dilemma of setting priorities in the welfare state

The aging of the population combined with restricted economic resources is leading to an increasing gap between care needs and care resources. The first strategy to cope with this growing disparity is often the rather non-controversial attempt to optimize the use of the resources. At some point in time, however, more crucial decisions are needed. Four levels of decision-making in the system of care services may be identified - from decisions regarding national resource allocation to decisions regarding individual users. The different conditions for making decisions and setting priorities at each level must be considered when studying the decision-making process and the consequences - including the repercussions for other levels and sectors. With Sweden as a case, four trends in decision-making can be seen: decentralization of many controversial decisions; redefining of the lines of responsibility between sectors; increasing inequality in the accessibility, cost, and quality of care; and a general lack of public discussion and debate about central welfare issues.     

Effects of defense spending on the Texas economy: An example of concave programming

The projected defense buildup by the Reagan Administration through 1937 will provide strong stimulus to the Texas economy. In this paper, we provide numerical estimates of the emerging additional output and the number of jobs in 173 productive sectors of the state's economy. The calculations are carried out inside the framework of a new concave programming format which makes it possible to compare the need for labor in 23 aggregate sectors with the projected available workforce. In sectors with scarce labor supply, wages will start to rise. The general price level will then also rise from the cost side. Appropriated defense dollars will then buy less real goods and services than originally envisaged. The model was solved using a computer code for successive linear programming. The computations represent one of the larger applications of this particular computer code to date.     

Insurance supply with capacity constraints and endogenous insolvency risk

Negative shocks to industry capital and significant capital adjustment costs have been offered as an explanation of periodic “crises” in the property-liability insurance market. According to these capacity constraint models, in which post-shock production must meet a solvency constraint, increases in price can cause some or perhaps all of the cost of a negative shock to capital to be shifted to policyholders. This article develops a model of insurance supply with capacity constraints and endogenous insolvency risk that incorporates limited liability and potential loss of insurer intangible capital. If industry demand is inelastic with respect to price and capital, the model predicts that price will increase following a negative shock to capital, but by less than the amount needed to fully offset the shock. Equity value and the expected recovery by policyholders for post-shock production are predicted to decline. Elastic demand mitigates shock-induced price increases.     

Adjustment costs in labour markets and the distributional effects of trade liberalization: Analytics and calculations for Vietnam

This paper explores the implications of different labour market adjustment formulations for the analysis of trade liberalization across different sectors and households in the Vietnamese economy using computable general equilibrium (CGE) models. The model is calibrated to a model admissible Vietnamese data set for 1997.We use five different adjustment cost treatments in analyzing the effects of trade liberalization in Vietnam. We compare simulation results from each and show how different treatments can significantly affect the distributional impacts of policy reforms, such as the trade liberalization. First, labour is treated as fully mobile across all sectors in the economy. Second, the sectors of economy are broken down into the two blocks of agricultural and industrial-service sectors and labour markets are treated as segmented by sector block. No mobility of labour between blocks is allowed while labour within each sector block remains fully mobile. The third is the same as the second, but movement within each agricultural and industrial-service sector block involves transactions costs. In the fourth, mobility of workers from the agricultural to industrial-service sectors and vice versa is possible with transactions costs. Finally, we calibrate the model with unemployment but no adjustment costs for labour reallocation to explore how model results differ in terms of adjustments in the labour market and welfare effects.Our results indicate significant differences in the impacts from trade liberalization across these cases. The redistributional impact of trade liberalization is sharper against poor rural households with segmented labour markets and with transactions costs, while aggregate efficiency gains are similar to no adjustment cost analyses. The conclusion is the choice of model structure for labour markets is crucially important for the perceived distributional impacts of trade liberalization.     

A quantification of policy reform: an application to the Uruguay Round Negotiations on Agriculture

We employ an empirical general equilibrium model to quantify the welfare effects of trade policy reformation in the Uruguay Round Negotiations on Agriculture. Our approach is two-fold: first we focus on the primary players in the agricultural negotiations: the Cairns Group, the European Union, Japan, and the United States, where the players are defined as benevolent governments whose primary objective is to maximize total welfare, measured in terms of the equivalent variation (EV). Second, we take into account the divergent objectives of different interest groups within the targeted regions, namely from the agricultural and non-agricultural sectors, where different weights given to these sectors depending on their political influence. Here the decision making authorities, or governments, are no longer assumed to focus solely on the maximization of the region’s EV welfare; instead they are assumed to maximize a payoff that is defined by the utilities of the agricultural and non-agricultural interest groups. This is modeled with a Political Preference Function that has a CES functional form.The results lead to several conclusions. The greater the reduction in protection, the greater the increase in welfare for most of the regions of the world. We contend that comparatively moderate reductions were enacted however, because of the relative political power that the domestic agricultural interests possessed in each region.Though the goal of the WTO/GATT is obviously to liberalize trade, only modest gains may be expected in the area of agriculture due to the internal conditions that have been advanced in this paper.     

Hungary in transition: a computable general equilibrium model comparison with Austria

We approach the problem of Hungary's transformation from a partially centrally planned to a market-oriented economy with a cross-country comparison using two computable general equilibrium (CGE) models of Hungary, 1977 and 1986, and one of Austria, 1976. These three models represent a continuum of small open economies and allow a “quasidynamic” analysis using static CGE models. We examine two types of transformation issues: external (trade liberalization, import price reductions, and redirection of foreign trade; “Dutch Disease reversal”) and internal (decreases in subsidy levels). Overall, it is clear that with Hungary's borrowing constraints, liberalization should not be pursued in isolation; a change in the tax structure is necessary at the same time. The results for Austria indicate that liberalization brings smaller welfare improvements accompanied by smaller increases in the current account and government deficits.     

Reforming the European Common Agricultural Policy: From price & income support to risk management

Over the last 30 years, the European Union has significantly reformed its Common Agricultural Policy by introducing direct payments to farmers and reducing price support levels. While the European agricultural prices become more volatile, all economic models assessing these reforms remain static and ignore the risk dimensions. This paper develops an original stochastic computable general equilibrium model capturing the different sources of risk, farmers’ risk attitude and risk contingent markets. We find that the reduction of price support levels has modest market impacts but negative global welfare effects by exposing risk-averse European farmers to the world price volatility. This issue is not solved by the direct payments, which have negligible market and global welfare impacts through their wealth effects. On the other hand, we find that unbiased futures markets can solve this global welfare issue by allowing European farmers to transfer their price risks. Therefore, European policymakers should ensure well-functioning risk contingent markets rather than maintaining rigid intervention price levels.     

以非再生能源资源定价改革促进经济增长方式转变

改革开放三十年来,中国取得了举世瞩目的成就。与此同时,一些深层次的矛盾逐步暴露。自20世纪50年代以来,推行重工业优先发展的经济发展策略,特别是近年来宏观经济与城市化快速发展,致使中国经济增长采取高耗能方式。经济增长方式的粗放,导致能源消费增长过快和环境污染加剧。能源与环境成为中国经济增长的双重约束。转变经济增长方式势在必行,而关键点在于非再生能源资源定价改革。非再生能源资源的开发使用制度的变革,目的在于充分体现资源成本与环境成本。资源成本是需要通过完善资源的基础市场即矿业权市场来实现的,而环境(生态)成本是需要通过资源税费制度改革实现的。最终,通过价格信号引导产业结构以及经济增长方式的彻底转变,实现经济的可持续发展。     

人民社会主义制度下的政府职能探讨

当社会资源主要由市场系配置而不是行政权力和计划时 ,当政府不再是大多数企业的所有者 ,全民所有也不再作为体现崇高政治理想和阶级路线正确性的惟一的美好的所有制形式而存在时 ,政府像从前那样直接管理社会经济的依据 ,就已经从现实的逻辑上彻底消失了。组织和执行公共物品的供给、保护产权、保护私有财产所有权、保证宏观稳定、限制溢出负效应、提供经济基础设施、公共服务及公共教育是人民社会主义制度下政府最基本的职能。传统体制的弊端就在于由于制度约束 ,政府无奈地管了本应由市场来解决的问题 ,从而造成社会资源浪费和人民福利损耗。     

Food security, consumption diversification and foreign exchange balances in Indonesia: Results from a multi-commodity simulation

Many countries adopt economic development strategies, within which an important element is the maintenance of low and stable food prices. In Indonesia, this is achieved principally through government subsidies to consumers of imported rice, the total cost of which fluctuates considerably from year to year, depending on world price movements and domestic production performance. Higher and possibly less stable domestic food prices appear inevitable in Indonesia, however, as the spectre of reduced oil revenues increases the government's concern with the cost of its food policy. Results from a stochastic simulation model of the agricultural sector show that the food price risk to which consumers and producers would be exposed in the absence of the stabilizing component of Indonesia's food policy would be considerable, rendering this component an unlikely area for significant change. A viable policy option appears to be the continuance of rice and wheat price stabilization, but with a graduated increase in the relative price of rice, reaching a total of 10% by 1985. Such a policy could result in net self-sufficiency in foreign exchange from staple food trade by 1990 and an improvement in aggregate economic surplus, although the expected decade improvement in food-energy consumption per capita would fall from 10% to 8%.     

The impact of social transformation on the non-government welfare sector and the social work profession

This article examines changes to non-government social welfare, their impact on service delivery and on the social work profession. To redress the legacy of the past and the consequent inequalities in social welfare, in the first decade of democracy the government allocated the bulk of its welfare resources to transforming the social security system at the expense of social service delivery. As a result, South Africa has a costly social security budget with social services on the brink of collapse, leaving social workers and other social service professionals with low morale in the face of the huge challenge of providing welfare services with scarce resources, especially in the non-government sector. Nevertheless, social work remains an important role player in social development. From its marginalised position in the first decade of democracy, in the second decade it is repositioning itself as a recognised contributor to reconstruction and development in South Africa.     

On welfare effects of increasing retirement age

We develop an OLG model with realistic assumptions about longevity to analyze the welfare effects of raising the retirement age. We look at a scenario where an economy has a pay-as-you-go defined benefit scheme and compare it to a scenario with defined contribution schemes (funded or notional). We show that, initially, in both types of pension system schemes the majority of welfare effects comes from adjustments in taxes and/or prices. After the transition period, welfare effects are predominantly generated by the preference for smoothing inherent in many widely used models. We also show that although incentives differ between defined benefit and defined contribution systems, the welfare effects are of comparable magnitude under both schemes. We provide an explanation for this counter-intuitive result.     

Alternate adjustments to external shocks in Hungary

A multisector computable general equilibrium model is used to evaluate Hungary's response to the external price shocks in the 1970s. The model incorporates characteristics of Hungary's reformed socialist economy. The results show that although the deterioration in terms of trade was important, the policies of insulation of the economy and increases in investment had a much larger detrimental impact on the trade balance. The existence of planned CMEA trade reduced the effects of the price shocks on the trade deficit. Export promotion by means of higher export subsidies would not have been effective to reduce the trade deficit in Hungary.     

Macroeconomic stabilization of primary commodities price cycles in developing economies

This paper proposes a strategy for stabilizing macroeconomic policy to address jointly the effects of changes in the prices of food, minerals and energy (oil). Our approach differs from the general literature, which analyzes the effects of a commodity boom or bust and therefore the solutions in terms of economic policy separately, that is, by type of commodity. The stabilization strategy that we propose considers a key fact affecting many open economies, namely, that they not only are affected by increases or decreases in commodity prices, but also benefit from them. Consequently, we use a structural model for an open economy with restricted households to show that welfare could be improved with a fiscal rule incorporating transfers to stabilize household consumption. This strategy noticeably dominates an aggressive monetary policy focused only on stabilizing inflation and a fiscal policy that has an excessive bias toward saving income from exports.     

Resource reallocation under alternative trade regimes: A simulation of Turkey's entry into the EEC

A general equilibrium model that is applicable for simulating the directions in which resources would be reallocated under alternative trade regimes, in particular, a free trade regime, is developed and applied to the Turkish economy. Because of the likelihood that Turkey will gain full entry into the EEC, the model is also used to identify sectors in which Turkey may have a comparative advantage relative to the EEC countries and to estimate magnitudes of static gains from full entry. To provide some tests of important generalizations from the theory of customs unions, these estimates of static gains are compared with some estimates of total welfare effects of the entry of the United Kingdom into the EEC.