The Global Trade and Environment Model: GTEM

Transcription

1 The Global Tade and Envionmen Model: A pojecion of non-seady sae daa using Ineempoal GTEM Hom Pan, Vivek Tulpulé and Bian S. Fishe Ausalian Bueau of Agiculual and Resouce Economics

2 OBJECTIVES Deive an ineempoal vesion of GTEM Demonsae ha an ineempoal geneal equilibium model can be solved in GEMPACK wih a single peiod nonseady-sae daabase. Examine he seady sae popeies of he model.

3 Basic Assumpions Basic Assumpions invesmen is fully bond financed local bonds ae pefecly subsiuable wih foeign bonds and hence ean he same global ae of eun. he egional capial sock is fully owned by idenical egional households. We do no impose he abiage condiion ha local bonds yield he same ae of eun as he physical capial.

4 Assumpions (The ae of eun in physical capial is allowed o vay acoss he egions) Regional households supply facos inelasically o he make The populaion and he labo supply gow exponenially a he ae of n Poducion funcions ae chaaceised by consan euns o scale

5 Given his envionmen, he only poblem lef o a household is he allocaion of income beween cuen consumpion and accumulaion of asses o maximise he sum of peiodic uiliies.

6 The poblem of he household The poblem of he household max ln c ( ) e θ d Subjec o c + db / d + db / d + n ( b + b = [ R k ρ b ] + W + ρ ( b + b h h f h h f f ) ) whee lowe cases ae fo pe capia vaiables

7 Wih he ineempoal budge consain he poblem becomes: max ln c ( ) e θ d subjec o f k h c exp{ ( ρ v n ) dv } d = b + ω + ω whee k h h ω = b + [ R k ρ b ]exp{ ( ρ v n ) dv } d h ω = W exp{ ( ρ v n ) dv } d

8 The soluion of he above poblem can be obained as c = c exp{ ( ρ ) v n θ dv f k h ( b + ω c = θ + ω ). }, and To make he above soluion opeaional we need o specify he expecaional ules deemining human and non-human wealh

9 Assumpions on expecaions: Assumpions on expecaions: Households have saic expecaions egading hei income, pices and populaion gowh They believe ha he global inees ae is fixed fo eve

10 Unde hese assumpions we have and k k ω h = W / ρ ω = R / ρ Theefoe, in place of f k h ( b + ω c = θ + ω ) We can wie c = [ θ / ρ ][ R k + W + ρ b f ] Given ha θ and ρ ae fixed we obain ha he cuen consumpion is a fixed facion of cuen income

11 How abou invesos? How abou invesos?

12 The opimal invesmen The opimal invesmen I K = δ exp{ β ( ρ ρ )} e g whee, e ρ = [ R + (1 δ ) Π ]/ Π 1 - saic expecaions e ρ = [ R (1 δ ) Π + 1 ]/ Π 1 - aional expecaions ρ e e T = ρ T 1 - eminal condiion

13 F F F Calibaion issue Calibaion issue ( Y, X ) = - conempoaneous (saic) ( Y, Y 1, ) = X - ecusively dynamic ( Y, Y 1, ) = + X - Ineempoal

14 How do we calibae an ineempoal model?

15 Link beween ime value and he base yea value Define X X 1 ΔX 1 X 2 X 3 ΔX ΔX 3 X ime cc _ X = = X k 1 k ΔX 1 + ΔX 1 + ΔX 1 Then, we can iniialize X = X Updae(change) X = cc _ X X + = k 1 k = X X fo all =, 1, 2,

16 Equilibium?

17 Seady sae Seady sae To sabilize deb and capial sock we need: σ = = δ PY Π I K Π In lineaised fom p + y = π + i = k + π When pices ae consan, we have y = i = k

18 Thee es simulaions Thee es simulaions o examine he convegence popey of he model unde iniial daa condiions (momenum simulaion); o compae he behavio of ajecoies unde aional and saic expecaions, and To examine he convegence popey of he model when all exogenous facos gow a 2 pe cen pe anum eveywhee.

19 Some esuls Some esuls

20 Momenum simulaion Momenum simulaion Gowh Raes of Real GDP aus usa Jpn eu fsu ow

21 Momenum simulaion Momenum simulaion Gowh Raes of Real GNP aus usa Jpn eu fsu ow

22 Momenum simulaion Momenum simulaion Gowh Raes of Regional Capial Sock aus usa Jpn eu fsu ow

23 Momenum simulaion Momenum simulaion Gowh Raes of Regional Real Invesmen aus usa Jpn eu fsu ow

24 Saic vs aional expecaions Saic vs aional expecaions

25 Saic vs aional expecaions Saic vs aional expecaions Gowh Raes of Capial Sock in he US SE RE

26 Saic vs aional expecaions Saic vs aional expecaions

27 Unifom gowh of 2 pe cen Unifom gowh of 2 pe cen Real GDP Gowh Raes Se Se Se Se Se Se

28 Unifom gowh of 2 pe cen Unifom gowh of 2 pe cen GNP Gowh Raes aus usa jap eu fsu ow

29 Unifom gowh of 2 pe cen Unifom gowh of 2 pe cen Gowh Raes of Regional Capial Sock aus usa jap eu fsu ow

30 Emission unde he momenum Emission unde he momenum Global Emission Pe Yea (Billion Tons of C2 Equivalen)

31 Global emission unde 2 pecen pe annum unifom gowh Global Emission Pe Yea (Billion Tons of Co2 Equivalen)

32 Conclusions A fixed savings ae ou of cuen income (GNP) is consisen wih ineempoally opimising behavio of he households. The model displays he popey of a neo-classical gowh model - he gowh ae of egional economies end o convege owad he gowh aes of exogenously supplied facos The assumpion abou inveso s expecaions fomaion did no affec he ajecoy noiceably An ineempoal CGE model can be solved by using a single peiod non-seady sae daabase and implemened wih GEMPACK.