• Environmental and Resource Economics Review
• /
• v.18 no.4
• /
• pp.587-635
• /
• 2009

The purpose of this study is to develop the Global Dynamic Computable General Equilibrium Model (Global CGE Model) in order to produce an economic impact analysis, including prospective obligations for the Post-2012 regime. This model explores the impact of an international emissions trading market and macroeconomic variables such as GNP, consumption, investment, imports and exports, in accordance with potential increased obligations on the Republic of Korea. Distinguishing it from existing studies, this Global CGE Model divides the global community into major economic groups, and in the capacity of the analyzed global model, reflecting the principle nations' macroeconomic indicators through the theoretical approach of endogenous growth theory. Policies such as an emissions trading scheme and carbon tax are reflected in the model. Also, in particular, the model reflects exogenous technological advances. According to this analysis, the stronger the greenhouse gas reductions, the greater the adverse effects on the economy; among macroeconomic indicators that appear, a significant decline is realized in the balance of trade, along with a significant decrease in investment and consumption. Energy dependence, in particular, plays a large role-varying in degree by industry type-, as greenhouse gas reductions would have a greater impact on energy-intensive industries. Furthermore, if Korea, currently recognized as a developing country, is given the obligation to reduce greenhouse gas emissions, competing countries such as China and other developing countries will be given an advantage.

• Journal of Korea Trade
• /
• v.24 no.8
• /
• pp.153-170
• /
• 2020

Purpose - As the US-China trade war intensifies and lasts long time, there is growing concern about its potential effects on the global economy. In particular, for the countries like Korea that have a large economic dependence on the economy of the two countries, the US-China trade war may have a great repercussion in many ways. The aim of this paper is to investigate the global productivity and market structure implications of the US-China trade war for Korea, as well as for other surrounding countries and regions. Design/methodology - In this paper, we develop a full multi-country/region multi-sector computable general equilibrium (CGE) model of global trade incorporating heterogeneous workers and firms in individual skill levels and used technologies. We then calibrate the model using a global Social Accounting Matrix (SAM) dataset extracted from the recently released GTAP 10 Database, and assess the potential effects of the US-China trade war on the aggregate real productivity and the market structure for Korea, as well as for other surrounding countries and regions. Findings - We show that the US-China trade war may largely affect the aggregate productivity in each sector in each country/region, as well as the global market structure through entry and exit of firms, which results finally in considerable changes in the industrial comparative advantage of each country/region. Though the effects are diverse sector by sector, the results show that Korea may also be affected significantly: concerning the real productivity implications, it is shown that the machinery industry may be affected the most negatively; on the other hand, it is shown that the number of exporting firms may decrease the most in the other transports industry. Originality/value - As the US-China trade war intensifies, many studies have tried to estimate the possible implications, and for this usually the CGE models have largely been used as the standard tool for evaluating the impacts of changes in trade policies. Standard CGE models, however, cannot be used to assess the global productivity and market structure implications due to the symmetric and simplified base assumptions. This paper is the first to analyze and quantify the possible impacts of the US-China trade war on the aggregate productivity and global market structure using a CGE model incorporating endogenous skill-technology assignment of heterogeneous workers and firms.

• Environmental and Resource Economics Review
• /
• v.18 no.1
• /
• pp.23-51
• /
• 2009

This research alms 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 m 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.

• The Journal of Asian Finance, Economics and Business
• /
• v.8 no.1
• /
• pp.543-550
• /
• 2021

The purpose of the study is to investigate the simulated effects of the Philippine tax reform, which is called Tax Reform for Acceleration and Inclusion Law, on household income and occupational choice. The study utilized the Family Income Expenditure Survey and tax collection as input to Computable General Equilibrium-Top Down Behavioral Microsimulation approach to determine the effect of Philippine tax reform on household income and occupational choice. The results of the study show that the household income in the Philippines will increase due to the implementation of the Philippine tax reform. Also, the study had found that tax reform results drive the household to shift from being farming entrepreneur to salaried workers since the utility derived from being workers is much higher compared to the utility derived from being entrepreneur. The findings of this research suggest that the Philippine Tax Reform for Acceleration and Inclusion Law is beneficial to the household since their income would increase, which will further result to an increase in their capability to buy goods and services. However, the tax reform would also lead to imbalance between the distribution of numbers of workers across sectors such as entrepreneurial farming, entrepreneurial non-farming, and wage sector.

• Journal of Applied Tourism Food and Beverage Management and Research
• /
• v.17 no.1
• /
• pp.41-67
• /
• 2006

The study is aimed to analyze the influence of FTA(Free Trade Agreement) between Korea and Japan on tourism and to suggest ways to increase tourists exchange between them by considering countermeasures of Korea's tourism based on the analysis and deriving political significance. The results of the study showed that the expected effects of FTA between Korea and Japan on tourism would overall be positive. There would be increases in employment and a higher rate of foreign-exchange earning, which plays a critical role in the cash flow. Therefore the government is required to prepare for several political measures as follows. First, ways to promote investment in tourism have to be established in a systematic way for FTA. Second, restructuring of tourism has to be considered seriously for tourism to be a high value-added industry after FTA. Third, the tourism information industry needs to be included in the tourism promotion act to promote e-tourism using information technology. In addition to this, an expansive cluster strategy needs to be developed, which relates tourism to other industries like culture and movies and to find ways to re-locate and re-educate manpower currently engaged in the tourism industry. Though the study investigated the influence of FTA on tourism through a practical analysis, it was restricted only to Korea. So the influence of FTA between Korea and Japan on the tourism of Japan should be included in further study. Furthermore, in subsequent studies the CGE(Computable General Equilibrium) model will be applied for objective analysis of the effects. Or measuring the ripple effect with multinational inter-industry relation table will be made for the study to make practical contributions to the development of government policy.

• Journal of the Korean Regional Science Association
• /
• v.13 no.2
• /
• pp.75-92
• /
• 1997

This paper is concerned with an estimation of optimal investment of road sector in 1996-2005. The main method is a Computable General Equilibrium (CGE) Model for Korea in which the optimal solution is derived in a recursively dynamic path. The model is composed of three main modules: the supply, the demand and the price. In this paper, the investment demand for the road is optimized with subject to national economic growth and price inflation. If the annual inflation level and the economic growth rate during 1996-2005 are set to 4.5%-5.0% and 6.0%-6.5% respectively, the optimal demand for the road investment is estimated as 155.1-180.1 trillion Won or 3.33%-3.89% of the GDP for ten years. It implies that the additional increase of the road investment by 0.61%-1.15% of the GDP is required for sustainable economic development, since the share of the road investment in the GDP of the latest 5 years has stayed around 2.27%. However, it is necessary to reduce construction investments on housing as well as to promote private financing of the road in order to maximize an efficiency of resource allocation.

• Environmental and Resource Economics Review
• /
• v.8 no.2
• /
• pp.207-225
• /
• 1999

최근의 경제위기가 진행되는 과정에서 국제원유가가 급속하게 하락하고 있다. 거시경제적으로 볼 때 원유가의 하락은 생산측면에서 요소가격의 하락, 수요측면에서는 상대가격의 변동이라는 상호작용을 유도하게 된다. 본 연구는 연산일반균형모형(computable general equilibrium : CGE)을 구축하고 외생변수의 영향에 대한 모의실험을 하여 거시경제적인 측면에서 정량적인 효과를 측정하는데 목적이 있다. 신고전학파적인 이론에 기초한 CGE모형을 설정하고 국제원유가가 32.8% 하락한 외생적인 충격에 대하여 모의실험한 결과는 다음과 같다. 원유가 하락은 GDP성장률을 약 l.59% 상승시키고 물가가 l.2% 하락하는 거시경제적 측면에서 긍정적인 효과를 가져오는 것으로 계산된다. 또한 에너지 수입이 전체 무역에서 큰 비중을 차지하고 있기 때문에 국제수지의 측면에서도 약 47억 달러 개선효과를 가지는 것으로 나타난다. 상대가격의 변동은 산업별로 다른 효과를 가지는데 에너지를 집약적으로 투입하는 산업을 중심으로 산업별 생산량과 가격에서 상이한 효과를 보이는 것으로 나타났다.

• Environmental and Resource Economics Review
• /
• v.18 no.3
• /
• pp.457-493
• /
• 2009

This paper evaluates major issues of Post-Kyoto negotiation of UNFCCC and conducted economic analysis by utilizing a computable general equilibrium(CGE) model(GTEM-KOR). It points three major agendas of the negotiation to be settled : (1) return of the US to GHG abatement commitment; (2) participation of developing countries in GHG abatement commitment; and (3) development of a comprehensive approach for post-Kyoto period. It also emphasizes the differentiation of developing countries and the type and strength of commitment as the negotiation issues for settlement of those agendas. The analysis by using GTEM-KOR shows the differentiation between developing countries based on per capita GDP and/or per capita emissions is inefficient in terms of global GHG emission reduction and it will exposure Korea to strong pressure of commitment relative to other developing countries. It also shows that the participation of developing countries such as China and India is one of the most important factors for the environmental effectiveness of the Post-Kyoto regime. It emphasizes that the relative strength of commitment and the scope of country participation rather than type of commitment are major components determining the economic and environmental effectiveness of the Post-Kyoto regime.

• Journal of Korea Trade
• /
• v.25 no.3
• /
• pp.48-64
• /
• 2021

Purpose - This study examined the effect of tariff cuts on productivity in Korea's manufacturing industries and the effect of initial productivity level before tariff cuts on productivity improvement after tariff cuts. We also attempted to identify whether import-driven or export-driven factors are more important for productivity improvement, especially in low productivity industries. Design/methodology - Since tariff reduction is a policy decision that can affect cross-industry, its impact is spread across all industries beyond the scope of a single firm through the input and output network of industry structure. Accordingly, we proposed a new method to measure the change in productivity to reflect the impact of tariff cuts across industries. Through an Armington CGE analysis, changes in endogenous variables can be directly measured after the exogenous shock of tariff reduction, and the amount of movements in productivity triggered by tariff cuts can also be calculated. We can thus assess the effectiveness of exogenous policy, such as tariff cuts, through the difference between the benchmark and counterfactual values of endogenous variables. Findings - This study confirmed that tariff reduction positively affected productivity improvement in Korea's manufacturing industries. It also confirmed that productivity gains occur in Korea's leading export industries. Finally, greater productivity gains were recorded in the group with additional high-export-share or high-import-share conditions for low productivity industries. These results are, in a limited sense, consistent with the existing studies that emphasize the importance of exports and imports on productivity improvement, especially for low productivity industries. Originality/value - The results of our experiments are different from those of non-CGE studies, which measure the industry-level change in productivity with dummy coefficients, in terms of directly calculating the amount of change in productivity. In addition, we propose that the Armington CGE model is more appropriate than the Melitz CGE model to directly measure the productivity after tariff cuts. This is because the Melitz CGE model assumes the given specific productivity density, which does not change after an overall drop of tariffs. To the best of our knowledge, this approach to directly calculating productivity by reflecting the impact of tariff reduction across industries through CGE analysis, is unprecedented in this literature.

• Journal of Korean Society of Rural Planning
• /
• v.28 no.4
• /
• pp.93-104
• /
• 2022

Agriculture is one of the most vulnerable sector to droughts, and drought damage on the agriculture sector could have effects on other sector. Droughts have different characteristics compared to other extreme events, which means more sophisticated methods considering the characteristics of droughts are required when measuring their damage. The purpose of this study is to analyze the damage of droughts based on limited computational general equilibrium model. To be specific, we constructed a CGE model focusing on the agriculture sector in Korea. Also, to limit changes in land use and labor, we limited them, and assume droughts only have effects on productivity of value-added. Lastly, we simulate drought effects on rice production in Korea based on several climate scenarios and GCM to identify the economic effects of droughts. The results show that 1) the cumulated damage of droughts during 2021~2040 is higher than other periods (2040~2061, 2081~2100), 2) the correlation between the damage of droughts and SSP scenarios is insignificant. This result implies the necessity of the effective drought risk management to prevent future droughts effects, irrespective of mitigation policies. 3) Due to increases in rice price, GDP of rice sector is increased. However, GDP of the other sector and consumer welfare are decreased. This result show that indirect effects of droughts would be more important when measuring drought effects on agriculture sector.