Effects of the Global Financial and Economic Crisis on the Bolivian Economy: A CGE Approach

This paper analyses the impact of the Global Financial Crisis on the Bolivian economy. The PEP 1-1 Standard Model has been employed to analyze the effects of a reduction in (i) the world export prices of mining and agriculture, (ii) the world demand of textiles, and (iii) transfers to households (i.e., remittances) from abroad. The model has been calibrated to a new 2006 SAM for Bolivia. The households have been disaggregated according to their location (urban and rural) and ethnicity (indigenous and non-indigenous). The factors of production have been disaggregated into skilled and unskilled labor, capital, and natural resources. Not surprisingly, our results highlight the relevance of the decrease in the export price of natural gas in explaining the negative effects of the Global Financial Crisis.Computable General Equilibrium Model, Financial Crisis, Forecasting and Simulation

Impacts of Trade Liberalization on Poverty and Inequality in Argentina

Using the most recent estimates of agricultural price distortions, this chapter studies the economic, poverty, and income inequality impacts of both global and domestic trade reform in Argentina, with a special focus on export taxes. Argentina offers an interesting case study as the only large agricultural exporter that has, at many points in its history, applied export taxes to several of its agricultural products. The chapter combines results from a global economy-wide model (World Bank’s Linkage model), a national CGE model, and microsimulations. The results suggest that liberalization of world trade (including subsidies and import taxes, but not export taxes), both for agricultural and non-agricultural goods, reduces poverty and inequality in Argentina. However, if only agricultural goods are included, indicators for poverty and inequality do not improve and even deteriorate somewhat. This is particularly the case if export taxes are eliminated. The chapter discusses the possible reasons for those results, offers some caveats, and suggests some lines for further research.Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

Export Taxes, World Prices, and Poverty in Argentina: a Dynamic CGE-Microsimulation Analysis

In this paper we implement a sequential dynamic computable general equilibrium model combined with microsimulations to assess (1) the short- and long-run economic impacts of a gradual reduction in the export tax that was introduced during the economic crisis that hit Argentina at the end of 2001, and (2) the impact of a decrease in the world prices of food products, one of the country’s main export product. Our results show that the elimination of the export tax would have different long run effects depending on the fiscal instrument that is used by the government to compensate for the loss in tax revenue. On the one hand, when the government budget is equilibrated by an increased deficit, the average annual growth rate for 2008-2015 is lower than in the baseline scenario. On the other hand, when the government budget is equilibrated by an increased direct tax rate, there is a long-run positive effect on growth. In any case, the employment level is lower and the price of food items is higher. Therefore, the poverty headcount ratio increases. As expected, a reduction in the world price of food items (i.e., a worsening in Argentina’s terms of trade) would impact negatively on the country’s GDP growth rate and poverty, particularly in the rural areas.Poverty, export taxes, food prices, Argentina, computable general equilibrium microsimulations

Growth analysis in developing countries: empirical issues and a small dynamic model

Most developing countries are small open economies; they have quite limited absorptive capacity for new physical and human capital; face credit constraints in international financial markets; and, last but not least, they are usually far from the steady state. Thus, transitional dynamics starting from actual initial conditions matters, and matters a lot. To account for these features in the simplest way, we develop a small intertemporal model suitable for growth analysis in developing countries. We discuss each model equation, variable and parameter from an empirical point of view; we analyze the model’s main dynamic features; and we present illustrative simulations for a “typical” developing economy. We find a rich transitional dynamics induced by the existence of absorptive capacity functions and a foreign debt constraint. We also find that for many relevant variables and parameters there are still problems of lack of data and estimates. Thus, a good deal of empirical work on these issues is needed to make growth analysis in developing countries operational for applied policy analysis

Growth analysis in developing countries: empirical issues and a small dynamic model

Most developing countries are small open economies; they have quite limited absorptive capacity for new physical and human capital; face credit constraints in international financial markets; and, last but not least, they are usually far from the steady state. Thus, transitional dynamics starting from actual initial conditions matters, and matters a lot. To account for these features in the simplest way, we develop a small intertemporal model suitable for growth analysis in developing countries. We discuss each model equation, variable and parameter from an empirical point of view; we analyze the model’s main dynamic features; and we present illustrative simulations for a “typical” developing economy. We find a rich transitional dynamics induced by the existence of absorptive capacity functions and a foreign debt constraint. We also find that for many relevant variables and parameters there are still problems of lack of data and estimates. Thus, a good deal of empirical work on these issues is needed to make growth analysis in developing countries operational for applied policy analysis

On the impacts of higher tobacco taxes in Argentina: a computable general equilibrium approach

Objectives: We analyse the employment effects of increasing tobacco taxation in Argentina by building a computable general equilibrium (CGE) model. Methods: In line with recent changes in tobacco taxation in the country, the CGE model simulates an increase in excise tax on cigarettes. Results: The results show that even a substantial increase in tobacco taxation induces a zero-net change in overall employment in the economy when the newly raised tax revenues are spent by the government on education, health or public infrastructure. Increased tobacco taxes may shift jobs from tobacco-related sectors to other sectors of the economy, but the overall impact on the total number of jobs is negligible. Conclusions: The widely documented positive effects of higher tobacco taxes (including a healthier population, more productive workers, savings from avoided costs of medical treatment for tobacco-related diseases, reductions in the number of new young smokers, among others) would far outweigh the nearly null effect of higher taxes on total net employment

Global socio-economic impacts of changes in natural capital and ecosystem services:State of play and new modeling approaches

The year 2020 is a critical year for sustainable development policy and practice with the review and renewal of various international commitments including the Sustainable Development Goals, the Convention on Biological Diversity and the Paris Agreement. The post-2020 agenda needs to be informed by more robust analytical approaches that capture the interactions between the economy, society and the environment. In this paper, we review the state of the art in available models and datasets that lay the groundwork for future analytical work to inform this agenda. Based on this review, we propose an integrated modeling approach for global analysis to underpin international policy discourse and advocacy, and; a sub-global approach focusing on evaluating specific strategies and policy portfolios to make progress toward sustainability commitments considering detailed local country context. Both approaches rely on integrating whole of economy computable general equilibrium models with spatial land use land cover and ecosystem services models. Endogenizing feedbacks between modeling system components ensures that evidence is based on interactions between all system components. Recent advances in methods, data and available tools discussed herein reduce barriers to entry for this type of complex systems analysis and increases the timeliness of policy advice

La contribución económica-ambiental de programas de conservación en México: una aplicación del Modelo Integrado Económico-Ambiental (IEEM)

En este estudio se investigan los impactos, tanto económicos como aquellos sobre el capital natural y servicios ecosistémicos, de tres programas de conservación en México. Más precisamente, se analizan el programa de pago por servicios ambientales, el programa para reducir las emisiones en el sector agrícola, silvicultura y otros usos de la tierra, y el programa de unidades de manejo para la conservación de la vida silvestre. La estimación de los beneficios de estos programas es importante para justificar su financiamiento, en un contexto en el cual los recursos públicos son cada vez más escasos. Para tal fin, se aplica el Modelo Económico-Ambiental Integrado (IEEM por sus siglas en inglés) vinculado con la modelación espacial de alta resolución de cambios en uso y cobertura de suelos y servicios ecosistémicos (IEEM+ESM). Los resultados muestran que el impacto combinado de estos tres programas sobre el producto interno bruto acumulado hasta el año 2035 es de alrededor de US$856.9 millones de dólares, mientras que el impacto sobre la riqueza es aproximadamente US$492.3 millones de dólares. En conjunto, los tres programas considerados reducen la pobreza en 1,800 individuos. IEEM+ESM permite cuantificar, además de los efectos puramente económicos, el aporte que realizan distintos servicios ecosistémicos como, por ejemplo, cultura y recreación, de abastecimiento de agua y de regulación. A modo de ejemplo, cuando se consideran los servicios ecosistémicos de regulación, el impacto conjunto de los tres programas sobre el producto interno bruto es 1.34 veces más elevado. Los resultados presentados en este estudio pueden ser de utilidad para la obtención de recursos que permitan la continuidad e, incluso, la ampliación de estos programas, considerando que contribuyen a la conservación de la biodiversidad y el capital natural, así como también al bienestar de la sociedad mexicana.Centro de Estudios Distributivos, Laborales y Sociale

Time Use and the Care Economy in Latin America: A General Equilibrium Analysis

In this paper, our interest is in assessing the impact of various policy measures on the care economy in Latin America. Specifically, we plan to quantify the macro and meso impacts of an increase in the government provision of goods and services related to the care economy. In terms of method, we extended GEM-Core, a recursive-dynamic CGE model documented in Cicowiez and Lofgren (2017), to make it gender-aware and single out aspects related to the care economy. Specifically, our model includes: (1) male and female labor categories, (2) formal and informal segments in the labor market, and (3) unpaid domestic and care work, and (4) labor-leisure choice or labor supply decision for men and women separately. In Latin America, female employment – both paid and unpaid -- predominates in unpaid domestic and care work. In terms of literature, our model contains the elements that Fontana (2013) describes as those required to analyze gender issues in general and the care economy in particular. In terms of results, we find relevant impacts from simulating changes in the government supply of services related to the care economy, such as childcare services. Furthermore, we single out the key parameter governing the impact of such shocks. In fact, we find that parameters such as the elasticity of substitution between male and female workers and the price-elasticity of domestic work have have a significant impact on our quantitative results. Therefore, we perform a sensitivity analysis regarding the value assigned to these particular parameters