517 research outputs found
Hydrogen in Passenger Transport: A Macroeconomic Analysis
Hydrogen is often seen as a promising future energy carrier given the major reliance of today?s transport sector on finite fossil fuels. This working paper assesses the macroeconomic effects of introducing hydrogen as fuel in passenger transport within the framework of the computable general equilibrium (CGE) model PACE-T(H2). Our simulation results suggest small improvements in the macroeconomic performance in almost all European countries from the introduction of hydrogen. The magnitude of economic effects however depends on the assumed learning curve of hydrogen cars and on the future development of hydrogen infrastructure costs. The results presented in this paper build on data and projections developed in the EU funded ?HyWays? project. --
The Developed World's Demographic Transition - The Roles of Capital Flows, Immigration, and Policy
The developed word stands at the fore of a phenomenal demographic transition. Over the next 30 years the number of elderly in the U.S., the EU, and Japan will more than double. At the same time, the number of workers available to pay the elderly their government-guaranteed pension and health care benefits will rise by less than 10 percent. The fiscal implications of these two demographic trends are alarming. Paying promised benefits will, it appears, require a doubling or more of payroll tax rates. This paper asks if there is a silver lining in this dark cloud hanging over the developed world. Specifically, can the developed economies hope to be bailed out by either macroeconomic feedback effects of by increased migration? To address these questions, this paper develops and simulates a dynamic, intergeneration, and interregional demographic life-cycle model. The model has three regions the U.S. Japan which exchange goods and capital. The model features immigration, age-specific fertility, life span extension, life span uncertainty, bequests arising from incomplete annuitization, and intra-cohort heterogeneity. Other things equal, one would expect the aging of the developed economies to increase capital per worker as the number of suppliers of capital (the old) rises relative to the number of suppliers of labor (the young). But given the need to pay the elderly their benefits, other things are far from equal. According to our simulations, the tax hikes needed to finance benefits along the demographic transition path generate a major capital shortage that lowers real wages by 19 percent and raises real interest rates by over 400 basis points. Hence, far from mitigating the developed world's fiscal problems, macroeconomic feedback effects make matters significantly worse. The simulations also show that increased immigration does very little to mitigate the fiscal stresses facing the developed world. On the other hand, there are policies that can materially improve the developed world's long-term prospects. The one examined here is closing down, at the margin, existing government pension systems and using consumption taxes to pay off those program's accrued liabilities. This policy could be coupled with the establishment of a fully funded mandatory individual saving system. According to our simulations, this policy would impose modest welfare losses on current generations, but generate enormous welfare gains for future generations. Future Europeans and Japanese benefit the most. Their net wages almost triple, and their welfare levels double compared with the no-reform scenario.
The Role of Immigration in Dealing with the Developed World's Demographic Transition
This paper and its companion study, Fehr, Jokisch, and Kotlikoff (2004), develop a three-region dynamic general equilibrium life-cycle model to analyze general and skill-specific immigration policy during the demographic transition. The three regions are the U.S., Japan, and the EU. Immigration is often offered as a solution to the remarkable again underway in the developed world. Absent an immediate and dramatic change in immigration, dependency ratios will roughly double over the next three decades placing fiscal institutions, in particular, and economies, in general, under enormous stress. Can immigration alleviate these stresses? The answer is unclear bacause a number of offsetting factors are at play. First, increased immigration raises the size of the labor force, but also lowers real wages. Hence, the increase in the taxable wage base due to immigration will be less than might otherwise be expected. Second, immigrants arrive with some capital and accumulate more capital as they age. This raises labor productivity and both payroll and income tax bases. Third, immigrants, like natives, require public goods and become eligible for government welfare, health care, and pension benefits. Fiscally speaking, how much one earns' from a new immigrant depends on the immigant's skill level, which, in turn, determines the immigrant's level of earnings. The reason is that taxes and transfer payments are, in general, collected and distributed on a progressive basis. Consequently, high-skilled immigrants deliver a larger bang for the buck when it comes to paying net taxes (taxes paid net of transfer payments received). Our model confirms this point. Nonetheless, its findings, even with respect to high-skilled immigration, which we investigate in detail in this paper, are not pretty. It shows that a significant expansion of immigration, whether across all skill groups or among particular skill groups, will do remarkably little to alter the major capital shortage, tax hikes, and reductions in real wages that can be expected along the demographic transition.
Socio-political factor of qadĂĄâ in eighth/fourteenth century Syria
The relationship between theory and practice in Islamic law can be examined in several ways. With regard to the substance of Islamic law one could ask in which way are or can the rulings of the sharÄ«âa be applied. Another question concerning the external aspects of the sharÄ«âa could be, to what extent do the political situation, the judicial administration, the education system and other socio-political factors allow a sharÄ«âa conforming jurisdiction. QÄážis who are not qualified, whose competence is reduced by the political rulers or whose judgements are influenced by political interests, are not able to exercise qÄdÄâ in the frame of the sharÄ«âa. The examination at hand therefore aims to reconstruct the socio-political background of a number of qÄážÄ«s in eighth/fourteenth century Syria. On the basis of several biographical works containing detailed and authentic descriptions of more than 200 Syrian qÄážÄ«s it shall be demonstrated that there existed the essential preconditions for exercising qÄdÄâ ' in that time and region. As a result of this study, which possibly throws light on a new aspect of qÄdÄâ ' in the Mamluk Empire, one may propose that the qÄážÄ«s, along with other âulamÄâ form a separate body within the Mamluk state system which on one side appears to be strong enough to resist political encroachments and, on the other, provides for and profits from a high level of legal education.La relaciĂłn entre la teorĂa y la prĂĄctica en el derecho islĂĄmico puede ser examinada desde distintos puntos de vista. Por lo que se refiere a la sustancia del derecho islĂĄmico, se puede plantear la pregunta de cĂłmo las normas de la ĆĄarÄ«âa son o pueden ser aplicadas. Otra pregunta relativa a los aspectos externos de la ĆĄarÄ«âa es hasta quĂ© punto la situaciĂłn polĂtica, la administraciĂłn judicial, el sistema educativo y otros factores sociopolĂticos permiten la existencia de una jurisdicciĂłn conforme a la ĆĄarÄ«âa. Los cadĂes que no tienen las cualificaciones necesarias, cuya competencia se ve limitada por los gobernantes o cuyos juicios se ven influidos por los intereses polĂticos, no pueden ejercer el cadiazgo en el contexto de la ĆĄarÄ«âa. El anĂĄlisis llevado a cabo en este artĂculo tiene como objetivo reconstruir el contexto socio-polĂtico de los cadĂes en Siria durante los siglos VIII/XIV. A partir de los datos de varios diccionarios biogrĂĄficos que contienen descripciones autĂ©nticas y detalladas de mĂĄs de doscientos cadĂes sirios, se demuestra que existĂan las pre-condiciones esenciales para ejercer el cadiazgo en aquella Ă©poca y regiĂłn. Se argumenta que los cadĂes, junto con otros ulemas, formaban un cuerpo especĂfico dentro del sistema estatal mameluco que, por una parte, era lo suficientemente fuerte como para resistir intervenciones polĂticas y, por otro lado, suministraba un alto nivel de formaciĂłn legal y se beneficiaba al tiempo de Ă©l
Fertility, Mortality, and the Developed Worldâs Demographic Transition
This study uses Fehr, Jokisch, and Kotlikoffâs (2004a) dynamic general equilibrium model to analyze the effects of changes in fertility and mortality on the developed worldâs demographic transition. The model features three regions â the U.S., Japan, and the EU-15 â and incorporates age- and time-specific fertility and mortality rates, detailed fiscal institutions, and international capital mobility, subject to adjustment costs. Our simulations confirm the offsetting fiscal and economic consequences of both higher fertility and lower mortality rates. The simulations indicate very minor effects on the developed worldâs rather bleak baseline transition path from either major increases in fertility rates or major reductions in mortality rates.demographic transition, computable general equilibrium model (CGE), fertility, mortality
A Simulation Model for the Demographic Transition in Germany : Data Requirements, Model Structure and Calibration
All countries in the European Union stand at the fore of a phenomenal demographic transition. Especially Germany will realize an enormous aging of its population. The reasons for this development are twofold: On the one hand, the number of elderly will more than double over the coming decades. On the other hand, since fertility rates are projected to stay at a low level, the number of workers available to pay the elderly their government-guaranteed pension and health care benefits will decline. Due to very generous social security systems this aging process is expected to put enormous pressure on future government expenses. To address the consequences of population aging in Germany, this paper develops a dynamic, intergenerational demographic life-cycle model. The model features immigration, age-specific fertility, life span extension and life span uncertainty. Cohorts within the model differ in their human capital profiles and leave bequests arising from incomplete annuitization. We also incorporate the German pension, health care and long-term care system. After introducing the theoretical model, we simulate the transition path including reforms of the pension system imposed by the so called "Riester" reform and keeping current immigration constant. The results are presented for the case of a closed and a small open economy. --Demographic transition,overlapping generations (OLG),computable general equilibrium models (CGE)
Will China Eat Our Lunch or Take us to Dinner? - Simulating the Transition Paths of the U.S., Eu, Japan and China
This paper develops a dynamic, life-cycle, general equilibrium model to study the interdependent demographic, fiscal, and economic transition paths of China, Japan, the U.S.,and the EU. Each of these countries/regions is entering a period of rapid and significant aging that will require major fiscal adjustments. But the aging of these societies may be a cloud with a silver lining coming, in this case, in the form of capital deepening that will raise real wages. In a previous model that excluded China we predicted that tax hikes needed to pay benefits along the developed worldâs demographic transition would lead to a major capital shortage, reducing real wages per unit of human capital over time by one fifth. A recalibration of our original model that treats government purchases of capital goods as investment rather than current consumption suggests this concern was overstated. With government investment included, we find much less crowding out over the course of the century and only a 4 percent long-run decline in real wages. Adding China to the model further alters, indeed, dramatically alters, the modelâs predictions. Even though China is aging rapidly, its saving behavior, growth rate, and fiscal policies are currently very different from those of developed countries. If successive cohorts of Chinese continue to save like current cohorts, if the Chinese government can restrain growth in expenditures, and if Chinese technology and education levels ultimately catch up with those of the West and Japan, the modelâs long run looks much brighter. China eventually becomes the worldâs saver and, thereby, the developed worldâs savoir with respect to its long-run supply of capital and long-run general equilibrium prospects. And, rather than seeing the real wage per unit of human capital fall, the West and Japan see it rise by one fifth percent by 2030 and by three fifths by 2100. These wage increases are over and above those associated with technical progress, which we model as increasing the human capital endowments of successive cohorts. Even if the Chinese saving behavior (captured by its time preference rate) gradually approaches that of Americans, developed world real wages per unit of human capital are roughly 17 percent higher in 2030 and 4 percent higher at the end of the century. Without China theyâd be only 2 percent higher in 2030 and, as mentioned, 4 percent lower at Centuryâs end. Whatâs more, the major short-run outflow of the developed worldâs capital to China predicted by our model does not come at the cost of lower wages in the developed world. The reason is that the knowledge that their future wages will be higher (thanks to Chinaâs future capital accumulation) leads our modelâs workers to cut back on their current labor supply. So the shortrun outflow of capital to China is met with a commensurate short-run reduction in developed world labor supply, leaving the short-run ratio of physical capital to human capital, on which wages positively depend, actually somewhat higher than would otherwise be the case. Our model does not capture the endogenous determination of skill premiums studied by Heckman and Taber (1996). Doing so could well show that trade with China, at least in the short run, explains much of the relative decline in the wages of low-skilled workers in the developed world. Hence, we donât mean to suggest here that all US, EU, and Japanese workers are being helped by trade with China, but rather that trade with China is, on average, raising the wages of developed world workers and will continue to do so. The notion that China, India, and other developing countries will alleviate the developed worldâs demographic problems has been stressed by Siegel (2005). Our paper, although it includes only one developing country â China â supports Siegelâs optimistic long-term macroeconomic view. On the other hand, our findings about the developed worldâs fiscal condition are quite troubling. Even under the most favorable macroeconomic scenario, tax rates will rise dramatically over time in the developed world to pay baby boomers their government-promised pension and health benefits. As Argentina has so recently shown, countries can grow quite well for years even with unsustainable fiscal policies. But if they wait too long to address those policies, the financial markets will do it for them, with often quite ruinous consequences.
Dynamic Globalization and its Potentially Alarming Prospects for Low-Wage Workers
Will incomes of low and high skilled workers continue to diverge? Yes says our paper's dynamic, six-good, five-region - U.S., Europe, N.E. Asia (Japan, Korea, Taiwan, Hong Kong), China, and India -, general equilibrium, life-cycle model. The model predicts a near doubling of the ratio of high- to low-skilled wages over the century. Increasing wage inequality arises from a traditional source - a rising worldwide relative supply of unskilled labor, reflecting Chinese and Indian productivity improvements. But China's and India's education policies matter. If successive Chinese and Indian cohorts become more skilled, major exacerbation of inequality will be precluded.Demographic transition, overlapping generations (OLG), computable general equilibrium models (CGE)
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