Effects of Increased Biofuels on the U.S. Economy in 2022

Achieving greater energy security by reducing dependence on foreign petroleum is a goal of U.S. energy policy. The Energy Independence and Security Act of 2007 (EISA) calls for a Renewable Fuel Standard (RFS-2), which mandates that the United States increase the volume of biofuel that is blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022. Long-term technological advances are needed to meet this mandate. This report examines how meeting the RFS-2 would affect various key components of the U.S. economy. If biofuel production advances with cost-reducing technology and petroleum prices continue to rise as projected, the RFS-2 could provide economywide benefits. However, the actual level of benefits (or costs) to the U.S. economy depends importantly on future oil prices and whether tax credits are retained in 2022. If oil prices stabilize or decline from current levels and tax credits are retained, then benefits to the economy would diminish.Bioenergy, economywide, ethanol, petroleum, trade, macroeconomic factors, RFS-2, Resource /Energy Economics and Policy,

Impact of the MFA phase-out on the world economy

This study focuses on the possible impact of the MFA phase-out on the world economy. Starting from analyzing trends in world textile and apparel trade, the study found that the developing countries were a growing factor in world T&A trade in recent decades. Moreover, using trade data from 91 countries over 37 years, the study indicates a strong positive relationship between trade in textile and apparel and the standard of living. The study further focuses on the possible impacts of the MFA phase-out on the world T&A using an intertemporal, global general equilibrium model. The study found the the MFA phase-out would enlarge world trade of T&A and developing countries will further gain market share in world total exports. Even though the developing countries currently free from the MFA quota restraints may lose their market shares, as world T&A prices are lowered by improving the efficiency of world T&A trade post-MFA, consumers are better off by consuming cheap commodities.Markets. ,Industries Economic aspects. ,Living standards. ,Trade policy. ,

Dynamic Gains and Losses from Trade Reform: An Intertemporal General Equilibrium Model of the United States and MERCOSUR

An intertemporal general equilibrium model of the United States and MERCOSUR is created to analyze the dynamic adjustments in both regions' commodity and capital markets after trade liberalization. Simulation results show that tariff reductions initiated by MERCOSUR have small positive effects on the U.S. production, trade, consumption and investment, and stimulates MERCOSUR's growth, and improves its current account. If tariffs are eliminated by both regions, both regions are better off from points of intertemporal social welfare, international trade, domestic investment, and growth. Agriculture benefits more from trade reform, which implies that ruralagricultural sector might have been a victim of trade protection policies.International Relations/Trade,

DISTRIBUTIONAL EFFECTS OF U.S. FARM COMMODITY PROGRAMS: ACCOUNTING FOR FARM AND NON-FARM HOUSEHOLDS

Using a highly disaggregated U.S. Computable General Equilibrium (CGE) model, we analyze the distributional impacts from the commodity programs governed by the 2002 Farm Act on U.S. farm and non-farm households. The farm household impacts occur through program effects on household income, farm sector output and commodity prices. Non-farm household impacts occur through taxes and the cost of food.Agricultural and Food Policy,

A Global Perspective of Liberalizing World Textile and Apparel Trade

International trade in textile and apparel has been governed by quantitative restrictions under the Multi-Fiber Arrangement (MFA) and earlier agreements for more than 30 years. One of the major accomplishments of the Uruguay Round was the Agreement on Textiles and Clothing (ATC), which provides for the dismantling of these restrictions. Under the Uruguay Round ATC, the MFA restrictions are to be phased out over a 10-year period and are scheduled to end by the year 2005. This study combines a data description of the trends in world textile and apparel trade flow, an econometric analysis on the linkage between textile trade and growth, and an intertemporal, world CGE model to evaluate the possible impact of liberalizing world textile and apparel trade. As textile and apparel industry is an important source of the growth, our study focuses on the effect on the developing countries.Textile trade and growth, ATC, Intertemporal general equilibrium

U.S. FOREIGN DIRECT INVESTMENT AND TRADE: SUBSTITUTES OR COMPLEMENTS? THE CASE OF THE FOOD PROCESSING INDUSTRY

The role of foreign direct investment as a complement or substitute to foreign trade continues to be debated in regard to the food processing industry. This study extends earlier work to demonstrate that FDI and trade depend on the stage and the similarities of the economic development of the host countries, as macroeconomic factors--such as exchange rate fluctuations and income growth-- act differently in developing vs. developed countries, and exporting vs. importing countries.Agribusiness, International Development, International Relations/Trade,

CHINA'S HOG PRODUCTION STRUCTURE AND EFFICIENCY

Over the last 20 years, China's demand for and supply of livestock products has increased dramatically. Although, China's livestock production has changed, with the share of pork production declining, pork production remains the core of the country's livestock industry. China's hog industry is adjusting to capture the benefits of specialization. This paper attempts to capture structural changes in China's hog production, its evolving trends, and economic efficiency. We estimate parametrically the overall efficiency and scale elasticity of 2500 surveyed hog farms in China. Our analysis indicates that the large commercialized farms are the most efficient but the middle size specialized farms with increasing returns to scale production technology are the most profitable.Livestock Production/Industries,

ASYMMETRIC INFORMATION IN COTTON INSURANCE MARKETS: EVIDENCE FROM TEXAS

In recent years, the crop insurance program has emerged as an important part of the U.S. farm policy. Farmers responded to the crop insurance program with increased participation nationwide. At issue is whether the rapid expansion of the program has worsened the asymmetric information problems in crop insurance markets. This paper investigates the presence of adverse selection in cotton insurance markets. Our results reject the conditional independence of the choice of insurance contracts and risk of loss, implying the presence of informational asymmetries between the insurer and insured in Texas cotton insurance markets. Results show that actual premium rates are significantly different from both pure and fair premium rates.Risk and Uncertainty,

MODELING THE EU'S EVERYTHING BUT ARMS INITIATIVE FOR THE LEAST DEVELOPED COUNTRIES

This study attempts to answer two key questions: what will be the likely impact of the EU's Everything But Arms (EBA) proposal, and, what would be the impact if the United States also were to implement a similar proposal? Using the GTAP model, the preliminary results in this paper show if only the EU's EBA proposal were implemented, then welfare in the least developed countries (LDCs) would increase by $2.5 billion (0.53 percent of their GDP), exports would grow by 3 percent, and GDP would grow by 2.3 percent. If the United States and the EU both implemented similar programs, then LDC welfare would increase by$3.1 billion (0.66 percent of GDP), exports would increase by 3.7 percent and total GDP growth by 2.9 percent. Another version of this scenario assumes that LDCs lack the supply capacity to exploit the new trade opportunities. In this case, LDC welfare increases by $0.9 billion (0.2 percent of GDP), exports grow by 4.1 percent, and GDP grows at 2.3 percent. The impact of this last scenario still may be overstated, given that trade preferences are not fully accounted for in the GTAP tariff database. Overall, the results suggest that improving market access for the LDCs could help raise per capita incomes above trend projections, but the gains are modest.Political Economy,

HOW WESTERN HEMISPHERE INTEGRATION AFFECTS THE U.S. ECONOMY IN AN INTERTEMPORAL GLOBAL MODEL

In a global general equilibrium analysis, an FTAA excluding the United States erodes U.S. agricultural trade preferences and export gains achieved under NAFTA. Participation in an FTAA increases U.S. agriculture exports $740 million, with gains in Central American and Caribbean Markets more than offsetting declines in NAFTA, Asia, and Europe.International Relations/Trade,