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General Equilibrium Models (general + equilibrium_models)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting88%

Selected Abstracts

Decisions on Production and the Behaviour of Savers in Recent General Equilibrium Models

METROECONOMICA, Issue 3 2000
Fabio Ravagnani
Modern general equilibrium theory faces notorious difficulty in extending the analysis of production to economies without complete forward markets, since at the ,initial date' the owners of any firm will typically disagree about the choice of the production plan. This paper examines the main approaches to the problem, with the specific aim of verifying whether they allow a satisfactory account of the interplay between firms and savers. It is argued that the theory oscillates between assumptions that may prove incompatible with savers' rationality, and hypotheses that prevent this shortcoming but render the formation of production decisions quite hard to explain. [source]

Trade Reform and Manufacturing Pricing Behavior in Four Archetype Asia-Pacific Economies*

ASIAN ECONOMIC JOURNAL, Issue 2 2005
Rod Tyers
F12; F14; N75 General equilibrium models are constructed of four Asia-Pacific economies that differ according to their levels of development, the comparative sizes of their manufacturing sectors and their patterns of comparative advantage and trade protection. The countries chosen are Australia, an industrialized importer of manufactures; Japan, an industrialized exporter; the Philippines, a developing importer; and the Republic of Korea, a developing exporter. Manufacturing industries are characterized as comprising identical oligopolistic firms producing homogeneous goods that are differentiated from competing imports. Oligopoly behavior notwithstanding, trade reforms are found to yield conventional results in that net economic gains are small while implicit transfers are substantial. More competitive (non-collusive) pricing by oligopolistic firms, which might be achieved through reform of competition law and trade practices surveillance, yields larger net gains and these gains tend to accrue to all domestic primary factors. Such reforms also yield substantial interaction between oligopoly behavior and economic and industrial structure. [source]

Global Trade Models and Economic Policy Analyses: Relevance, Risks and Repercussions for Africa

DEVELOPMENT POLICY REVIEW, Issue 2 2008
Hakim Ben Hammouda
Computable general equilibrium models are widely used for trade policy analyses and recommendations. There is, however, increasing discomfort with the use of these models, especially in Africa. This article demonstrates that the results of several such studies of the impact of trade reforms in Africa differ drastically in terms of both magnitude and direction, failing to take account of key features of African economies. It also outlines potential consequences of the misuse of CGE models for policy evaluation and suggests pitfalls to be avoided. [source]

Fiscal Policy Coordination and International Trade

ECONOMICA, Issue 294 2007
TORBEN M. ANDERSEN
While assertions are often made that non-cooperative fiscal policies suffer a contractionary bias, general equilibrium models have shown that the bias is unambiguously expansionary. This paper argues that the latter result relies on a particular and critical way of modelling international trade, and that under a more plausible trade structure, it is possible that fiscal policy is insufficiently expansionary in the non-cooperative case. Non-cooperative policy-making thus implies that fiscal policies are used too little if they expand private employment, and too much if they contract private employment. Inefficiencies in non-cooperative fiscal policies worsen when product markets become more integrated. [source]

The Lag from Monetary Policy Actions to Inflation: Friedman Revisited

INTERNATIONAL FINANCE, Issue 3 2001
Nicoletta Batini
This paper updates and extends Friedman's (1972) evidence on the lag between monetary policy actions and the response of inflation. Our evidence is based on UK and US data for the period 1953,2001 on money growth rates, inflation and interest rates, as well as annual data on money growth and inflation. We reaffirm Friedman's result that it takes over a year before monetary policy actions have their peak effect on inflation. This result has persisted despite numerous changes in monetary policy arrangements in both countries. Similarly, advances in information processing and in financial market sophistication do not appear to have substantially shortened the lag. The empirical evaluation of dynamic general equilibrium models needs to be extended to include an assessment of these models' ability to account for the monetary transmission lags found in the data. [source]

SPECIALIZATION AND TRADE: A GAME THEORETICAL APPROACH

PACIFIC ECONOMIC REVIEW, Issue 4 2006
Shuntian Yao
Different from the classical treatment, we adopt a game theoretical approach. Therefore in our models the prices of traded goods are endogenously formulated according to the bidding strategies of the producer-consumers. Furthermore, we assume that in the beginning individuals randomly choose their professions. As a result, with a short-run Nash equilibrium different types of professionals may have different utility levels; while through a dynamic process, a long-run Nash equilibrium with utility equalization is reached. Besides, we also attempt to provide a new algorithm for the computation of general equilibrium models in the Yang-Ng framework. [source]

Nonlinear Pricing in General Equilibrium Models with Joint Production

THE JAPANESE ECONOMIC REVIEW, Issue 1 2001
Kazuya Kamiya
This paper considers general equilibrium models of public utilities which produce either public goods or private goods. In the models, cases of increasing returns are not a priori excluded. The products of the public utilities and their costs are allocated to the consumers according to a rule that is dependent on information communicated to the public utilities. We show that if the public utilities follow a nonlinear pricing rule, the equilibrium allocations are always Pareto-optimal. Moreover, the message space is of finite dimensions. JEL Classification Numbers: D51, D60, H41, H42. [source]

DUAL ECONOMY MODELS: A PRIMER FOR GROWTH ECONOMISTS

THE MANCHESTER SCHOOL, Issue 4 2005
JONATHAN TEMPLE
This paper argues that dual economy models deserve a central place in the analysis of growth in developing countries. The paper shows how these models can be used to analyse the output losses associated with factor misallocation, aggregate growth in the presence of factor market distortions, international differences in sectoral productivity and the potential role of increasing returns to scale. Above all, small-scale general equilibrium models can be used to investigate the interactions between growth and labour markets, to shed new light on the origins of pro-poor and labour-intensive growth, and to explore the role of the informal sector. [source]

Productivity and Preferences in a Small Open Economy

THE MANCHESTER SCHOOL, Issue 2001
Jagjit S. Chadha
Following Hall (Journal of Labor Economics, Vol. 15 (1997), pp. S223,S250) it is increasingly common to incorporate preference, as well as productivity, perturbations in calibrated general equilibrium models. We assess the performance of a small open economy stochastic growth model (based on the Blanchard,Yaari framework) under alternative driving processes. Whilst both models provide familiar descriptions of the aggregate economy, we find that the model driven by productivity disturbances has clear advantages in explaining the behaviour towards foreign asset accumulation. [source]