A Characterization of Equilibrium in Incomplete Markets with Real Assets

원동철 한국계량경제학회 2016 계량경제학보 Vol.27 No.2

A closed-form solution of equilibrium outcomes is generally unavailable in a general equilibrium model with incomplete markets (GEI model). Competitive equilibrium may not be directly computable from the aggregate excess demand functions because they need not be continuous in GEI economies. This paper provides a new characterization of competitive equilibrium in the GEI model by putting into a new perspective the sudden shrinkage of risk-sharing opportunities at a spot price that makes some of the assets redundant and thus, may cause the discontinuity of demand functions. The new characterization is based on the notions of `pre-GEI equilibrium' and `test equilibrium'. Pre-GEI equilibrium outcomes yield a computational equivalent of competitive equilibrium while test equilibrium outcomes may provide existential information on equilibrium. Competitive equilibrium for the GEI model is generically computable as an outcome of pre-GEI equilibrium without resort to any element of the Grassmann manifold.

A Characterization of Equilibrium in Incomplete Markets with Real Assets

Dong Chul Won 한국계량경제학회 2016 JOURNAL OF ECONOMIC THEORY AND ECONOMETRICS Vol.27 No.2

A closed-form solution of equilibrium outcomes is generally un-available in a general equilibrium model with incomplete markets (GEI model). Competitive equilibrium may not be directly computable from the aggregate ex-cess demand functions because they need not be continuous in GEI economies. This paper provides a new characterization of competitive equilibrium in the GEI model by putting into a new perspective the sudden shrinkage of risk-sharing op-portunities at a spot price that makes some of the assets redundant and thus, may cause the discontinuity of demand functions. The new characterization is based on the notions of 'pre-GEI equilibrium' and 'test equilibrium'. Pre-GEI equi-librium outcomes yield a computational equivalent of competitive equilibrium while test equilibrium outcomes may provide existential information on equilib-rium. Competitive equilibrium for the GEI model is generically computable as an outcome of pre-GEI equilibrium without resort to any element of the Grass-mann manifold.

The Impact of COVID-19 on the World Economy

Seung-Hwan Yoon,Jong-Hwan Ko 한국무역연구원 2022 The International Academy of Global Business and T Vol.18 No.2

Purpose – The coronavirus, which appeared in Wuhan, China in late 2019, has had immense ramifications on the global community. This paper undertakes to identify the economic impact of COVID-19, which has spread as a global pandemic, on the global economy and international trade. Design/Methodology/Approach – Using a global, multisector, computable-general-equilibrium model, this paper attempts to assess the potential economic impacts of COVID-19. The baseline scenario was set up using the World Bank’s macroeconomic data, such as real GDP, population, labor, and capital from 2015 to 2019, to calculate future estimates. Policy scenarios were established by (1) drops in employment rate (0.4~8.8%) of the analyzed countries, (2) a 5% increase in trade costs, (3) an 8.3% decrease in income reduction, and (4) lastly, a 50% fall of income in affected services industries. Findings – Results show that the GDP of all countries, including the United States and China, contracted, demonstrating that COVID-19 is not only limited to a specific country but also negatively affects the economic growth of all countries. Regarding international trade, exports and imports of all countries have declined due to the increase in trade costs resulting from COVID-19. However, in terms of the trade balance, each country exhibits slightly different patterns. Some countries, such as the United States, ran a trade surplus and others recorded a trade deficit. Although aggregate exports and imports around the world declined, the reason some countries recorded a trade surplus was that imports declined more than exports did, so it would be reasonable to view it as a ‘trade surplus in an economic recession’. Research Implications – Analytical results imply that the COVID-19 pandemic is not limited to a specific region and has a negative impact on countries around the world, signifying that the only way to lessen economic damage is to surmount COVID-19 as soon as possible.

한-GCC FTA의 경제적 파급효과에 관한 연구

윤승환(Seung-Hwan Yoon) 한국무역연구원 2021 무역연구 Vol.17 No.5

Purpose-Currently, the Korean government has not officially taken a position on the Korea-GCC FTA negotiations due to the Middle East s complicated political and economic situation. However, this study attempts to analyze the potential economic effects of an FTA between Korea and GCC member countries, taking into account the possibility of a resumption in the future. Design/Methodology/Approach-Using a global, multisector, computable-general-equilibrium (GTAP) model and GTAP database Version 10A (the most recent), this paper undertakes the identification of the economic impacts of a Korea-GCC FTA. The baseline scenario was designed using the World Bank s macroeconomic data, such as real GDP, population, labor, and capital from 2015 to 2019 to calculate future estimates. Policy scenarios were established by a (1) 90% reduction in tariffs on goods, (2) a 50% reduction in ad valorem tariff equivalents on services, (3) a 0.15% increase in TFP (total factor productivity), and (4) lastly, the above three scenarios were combined to see the effects of a Korea-GCC FTA. Findings Simulation results showed that real GDP in Korea (0.11%) and GCC member countries (0.13% ~ 0.46%) increased, indicating that a Korea-GCC FTA would have a positive impact on economic growth on both sides. The impact on welfare also reveals similar results to GDP, showing the largest increase in Korea (about USD 2.2 billion), followed by Saudi Arabia and UAE (about USD 2 billion and USD 1.6 billion, respectively). When looking at the effect of Korea s exports by industry, exports of automobiles and parts increased the most (about USD 1.5 billion), followed by the electronics (about USD 1.19 billion), machinery (about USD 1.05 billion), steel (about USD 1 billion), and petrochemical (about USD 420 million) industries, suggesting that overall exports are expected to increase in Korea s manufacturing industry. In the case of the petrochemical industry, exports to countries other than GCC member countries are expected to increase by approximately USD 3.9 billion, which is the largest benefit. Research Implications-This study suggests the justification and necessity of an FTA. Overall, positive effects will be expected in terms of real GDP, welfare, exports, and imports. In addition, if Korea and GCC member countries sign an FTA, exports of Korea s major manufacturing sectors will increase, and GCC member countries will see an increase in oil (crude oil) and gas exports, creating a win-win situation. As the industrial structure between the two sides is complementary, a synergy effect can be expected, and an FTA with GCC countries rich in natural resources such as oil and gas can enhance energy security.

미중 무역전쟁과 코로나19의 파급효과 분석

윤승환 ( Seung-hwan Yoon ),안세화 ( Se Hwa Ahn ) 아시아.유럽미래학회 2021 유라시아연구 Vol.18 No.3

Using a global, multisector, computable-general-equilibrium model, this paper undertakes to identify the economic impact of the US-China trade war initiated by the Trump administration and the impact of COVID-19, which spread as a global pandemic in 2020, on the global economy and international trade. Analytical results reveal that the US-China trade war had a negative effect on both the U.S. and China and resulted in an increase in real GDP for the rest of the world. But the effect of the protectionist policy implemented by the U.S. was very minimal, raising questions about the effectiveness of the policy. When COVID-19 struck the world, the GDP of all countries, including the United States, decreased. Among them, the GDP of the United States and ASEAN fell more sharply, and the rapid increase in the unemployment rate seems to be the leading cause. In addition, the economic damage arising from the COVID-19 pandemic was much greater than that of the US-China trade war around the world, suggesting that overcoming COVID-19 as soon as possible is required to minimize economic damage. Each country’s economic stimulus packages were found to have a mitigating effect to some extent, with the exception of some countries, even if the damage caused by the US-China trade war and the COVID-19 pandemic could not be completely reversed. Regarding the impact of each scenario on international trade and trade balance, when the U.S. and China raise tariffs, both the U.S. and China show a decrease in both exports and imports. Still, the extent of the drop in imports is even greater than in exports, leading to a surplus in the trade balance. In the case of the COVID-19 pandemic, exports and imports decline in all countries, but the scale and direction of the decline are different for each country. The U.S. records a trade surplus, but China shows otherwise. In the case of private consumption expenditure, which is closely related to income, both countries’ expenditure decreases when tariff hikes by the U.S. and China. However, in all countries except the U.S. and China, consumption expenditure increases, albeit minimally. Consumption in all countries decreases due to COVID-19, albeit variously. Only in China does consumption expenditure increase, in this scenario by 0.98% to 2.2%, suggesting that economic disruption caused by COVID-19 is relatively small. Compared to other countries, as the decline in the unemployment rate is also relatively small, income most likely could be maintained, leading to increased consumption. In terms of the sectoral output in each country, in the case of scenario 5, assuming the double whammy of the US-China trade war and the COVID-19 pandemic, overall production of the service industry significantly decreases compared to that of the manufacturing industry. In particular, a decline in the service industry’s output is experienced in all countries except China and ASEAN. In order to reflect the damage caused by COVID-19 as realistically as possible in the model, the actual unemployment data of each country is used; however, the difference in the absolute terms of the unemployment rate in the scenarios seems to provide these results. Also, depending on each country’s economic and industrial structure, the shock response to the drop in the employment rate appears to be different. This suggests that job security has a significant impact on each country’s economy. In particular, the output of service industries (accommodation & food, transport, travel and tourism, recreation and leisure activities) with a relatively high proportion of self-employed workers reflects a significant decline, which is expected to impact these self-employed workers severely. Besides, as the increase in unemployment caused by COVID-19 has led to a decrease in household income, decrease in consumption expenditure, and consequently decrease in production, seeking measures to maintain job security and support for service industry workers who have suffered more damage than manufacturing industry workers is advisable.

기후변화 대응을 위한 EU 탄소국경조정메커니즘(CBAM)의 경제적 효과 분석

윤승환 한국무역연구원 2022 무역연구 Vol.18 No.1

Purpose – Countries around the world are focusing policy efforts on combating climate change and promoting long-term economic recovery, and major greenhouse gas emitting countries are joining the carbon neutrality declaration. To address the risk of carbon leakage, the EU introduced the CBAM(Carbon Border Adjustment Mechanism) in July 2021. The purpose of this study is to examine the potential economic effects of the CBAM on its major trading partners, including Korea, and to draw implications. Design/Methodology/Approach – Using a global, multisector, computable-general-equilibrium model and GTAP database Version 10A, this paper undertakes to assess the potential economic impacts of the CBAM. The baseline scenario was set up using the World Bank's macroeconomic data, such as real GDP, population, labor, and capital from 2015 to 2020 to calculate future estimates. Policy scenarios were established by (1) imposing 30 euros per ton of embedded emissions in the total amount of imports, (2) imposing 30 euros per ton of embedded emissions on five products covered by the CBAM in the European Commission’s July 2021 proposal, (3) imposing 30 euros per ton of CO contained in items that are subject to additional duties, and (4) lastly, the above scenarios 2 and 3 were combined to see the total effects of the CBAM. Findings – Simulation results showed that in the case of Scenario 1, wherein tariffs were imposed depending on CO emissions, intra-regional trade and production increased, resulting in a significant growth in consumer welfare in the EU (approximately $12.1 billion). Except for Japan, all major trading partners decreased overall, although there were disparities in size. In particular, China (about $10.9 billion), Russia (about $ 7.1 billion), and India (about $4.2 billion) reported significant drops in consumer welfare. Korea has exported an annual average of about $53.7 billion to the EU for the past six years, with items subject to the CBAM accounting for around $4.17 billion, or 7.8% of total exports. Of these items, iron and steel with a value of about $3.65 billion, accounting for about 87.3% of the total should be a source of concern for the Korean government and the steel industry. According to findings, the steel industry’s exports to the EU are likely to drop by 0.99 percent, resulting in a loss of nearly 310 million euros in exports (about 360 million US dollars). Research Implications – This study is meaningful in that it provides reference data to Korean industries that can be directly affected by the CBAM, which has already been introduced and is about to be implemented. For some export industries like the steel industry, in particular, it is necessary for the Korean government to actively support low-carbon technology innovation and accelerate the transition to a low-carbon economy.

정부 복지 정책의 평가 모형 : Welfare Measures of Taxes and Subsidies with Externalities in Computational General Equilibrium Model 계측 기능 균형 모델을 통한 정부 조세·보조금의 복지 측정

조원권 우송대학교 1997 우송대학교 논문집 Vol.2 No.-

본 논문은 지방 또는 중앙 정부가 지역 주민의 후생을 극대화하기 위하여 어떠한 정책수단을 활용하여야 할 것인가에 대한 문제를 제기하고 이러한 정책을 평가할 수 있는 모델을 설정함에 그 목적이 있다. 본 논문에서는 지역에서 발생하는 외부성(예. 공기오염, 교통등등)에 대한 여러 정책 수단에 따른 지역 주민의 후생 변화를 측정할 수 있는 이론적 틀을 제공하고자 하였다. 가장 최신의 이론이라 할 수 있는 Computational general equilibrium model을 적용하였는데 이 모델에서는 공기 오염에 의한 외부성과 외부성을 줄이기 위한 기술혁신등이 지방정부수준에서 모델내에서 명확하게 고려될 수 있다는 장점이 있다. 이 일반균형모델의 틀안에서 수요와 공급이 수학적으로 설정되어 소비자 또는 지역 주민의 정책 변화에 따른 후생 변화가 Compensation Variation(CV) 와 Equivalent Variation(EV)로 측정이 가능하다. This paper addresses the question: How should a state or central government choose the policy level in order to maximize its resident's welfare. We develop an analytical framework for assessing welfare change of state or regional residents from various policy schemes concerning externalities. We have constructed a computational general equilibrium model in which pollution externalities and abatement technology are incorporaed explicitly at state level. Demand and supply sectors are formally modeled mathematically within general equilibrium framework in which consumer's welfare change can be measured a compensation and equivalent variations.

관세철폐가 친환경연료 산엄에 미치는 일반균형적 파급 효과

배정환 한국환경경제학회 2009 자원·환경경제연구 Vol.18 No.1

This research aims at quantifying economic impacts of free trading policy on environment-friendly fuel industry applying a static general equilibrium(CGE) model for Korea. Theoretically, ‘polluters haven’ hypothesis had been debated as major issue on the environmental effects of trade liberalization during 1970s and 1980s but recent literature emphasizes that production, scale, structural, and regulatory effects may derive rapid diffusion of environment friendly technologies. In this study, trade liberalization policy affects output of agricultural sectors negatively while that of biodiesel as environment-friendly technology positively. The rise in the output of biodiesel is derived from the reduction in import prices of agricultural products due to the abolishment of tariff. The policy implication from the analysis is that feedstock for producing biodiesel should be exploited in the foreign countries where productivity of agriculture is quite predominant compared to Korean agriculture. 본 연구는 우리나라가 자유무역정책을 실시할 경우 경제 전반과 친환경연료인 바이오디젤 산업에 미치는 영향을 정태적 연산가능일반균형모형(CGE)을 이용하여 분석하였다. 이론적으로 자유무역과 환경 간의 관계에 대해서는 ‘공해안식처 가설’이 1970~1980년대를 풍미하였으나, 1990년대 이후 Townsend and Ratnayakee 등은 자유무역이 생산효과, 규모효과, 구조효과, 규제효과를 통해 친환경기술 도입을 촉진하는 기능이 있음을 역설한 바 있다. 본 연구는 이러한 측면에서 과연 무역자유화의 효과로서 관세철폐가 우리나라 바이오디젤 산업에 어떤 영향을 미칠 수 있는지를 정량적으로 분석했다는 점에서 의의가 있다. 연구 결과 관세가 철폐되면 농업부문 산출은 전반적으로 감소하는 반면, 바이오디젤 산업은 팽창하며, GDP와 소비자 후생이 증가하는 것으로 나타났다. 바이오디젤 산업이 팽창하는 것은 원료인 대두유가 해외에서 수입됨에 따라 관세를 철폐할 경우 원료 수입가격이 하락하기 때문이다. 즉, 토지 생산성 측면에서 우리나라에서 생산되는 원료를 바이오디젤 원료로 이용하기보다는 동남아나 북․중남미 등에서 원료를 개척하여 수입하는 것이 경제적 이익을 극대화할 수 있고, 자유무역은 이를 더욱 가속화시킬 수 있다는 것이다.

식품정보표시제도 강화에 따른 규제비용의 일반균형효과 분석

배정환(Jeong Hwan Bae) 한국경제연구원 2011 규제연구 Vol.20 No.1

본 연구는 식품정보표시제도 강화가 식품산업 및 관련 산업과 소비자 후생 및 GDP에 어떤 영향을 미치는지를 연산가능일반균형모형을 이용하여 분석함을 목적으로 한다. 식품정보 표시제도 도입에 따른 해당산업의 직접적인 원가 상승이나 정보제공에 따른 소비자 편익 증가에 대한 연구들은 많으나 원가 상승에 따른 일반균형효과를 분석한 논문은 거의 없는 것으로 보인다. 식품정보표시제 강화에 따른 생산원가 상승에 관한 자료에 기초하여 투입비 구조에 외생적 충격을 가했을 때, 아이스크림과 인삼, 육가공품의 산출이 다른 식품산업에 비해 상대적으로 가장 많이 감소한 반면, 포장재, 수송, 서비스 등의 관련 산업 생산은 증가하였다. GDP와 물가는 거의 영향을 받지 않았고, 소비자 후생은 213~1,187억 원 감소하는 것으로 나타났다. 즉 식품산업의 원가상승이 소비자 가격상승을 통해 소비자에게 전가되었으며, 포장, 수송, 서비스 산업에 대한 수요 증가로 인해 GDP에는 거의 영향이 없음을 보여주었다. 정책 당국에서는 식품정보표시제를 강화하는 규제를 도입하고자 할 때 소비자의 정보편익과 규제비용을 동시에 고려하여야 할 것이다. This study aims at investigating how fortified food information labelling system (FILS) may affect output and demand of food and relevant sectors, consumer welfare, and GDP employing a computable general equilibrium (CGE) model. Although there are a number of studies on direct cost analysis on food due to the FILS or consumer gains from improved information on food, studies on a CGE approach on FILS have not been found frequently. When external shocks which reflect increases in production costs due to the FILS are imposed on input cost structure of food sectors, simulation results show that output of ice cream, Ginseng, and meat processing sectors declined the most relative to other food sectors, while that of labeling, packaging, transport, and service sectors incremented slightly. GDP and consumer price index were barely affected, but consumer welfare diminished considerably by 21.3~118.7 billion Korean won. Hence the simulation outcome shows that cost increases due to the FILS was transferred to consumer mostly. Consequently, the regulatory agent who considers to introduce a FILS should take accont of not only regulation costs but also consumer information gains.

The Impact of Trade Liberalization on Water Use: A Computable General Equilibrium Analysis

( Jian Zhang ),( Maria Berrittella ),( Katrin Rehdanz ),( Richard S. J. Tol ) 세종대학교 경제통합연구소 (구 세종대학교 국제경제연구소) 2008 Journal of Economic Integration Vol.23 No.3

We used the GTAP-W model - GTAP version 5 with water resources added - to estimate the impact of hypothetical Doha-like liberalization of agricultural trade on water use. Three conclusions emerge. First, the change in regional water use is less than 10 per cent relative to the baseline in 2010, even if agricultural tariffs are reduced by 75 per cent. Second, patterns are non-linear. Water use may go up for partial liberalization, and down for more complete liberalization. This is because different crops respond differently to tariff reductions, but also because trade and competition matter too. Third, trade liberalization tends to reduce water use in water scarce regions, and increase water use in water abundant regions, even though water markets do not exist in most countries.