• Title/Summary/Keyword: Regional CGE Model

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Economic Impacts of Transportation Investment on Regional Growth: Evidence from a Computable General Equilibrium Model on Japan's Cross-Prefectural-Border Region

  • Thi Thu Trang, HA;Hiroyuki, SHIBUSAWA
    • The Journal of Asian Finance, Economics and Business
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    • v.10 no.2
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    • pp.183-193
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    • 2023
  • This paper proposes and examines the economic impact of infrastructure improvement on the San-En-Nanshin region in the Chubu area of Japan. We develop a single transportation computable general equilibrium (CGE) model for each subregion within the San-En-Nanshin region. The explicit modeling of the transportation infrastructure is defined based on interregional commuting flows and business trips, considering the spatial structure of the San-En-Nanshin economy. A CGE model is integrated with an interregional transportation network model to enhance the framework's potential for understanding the infrastructure's role in regional development. To evaluate the economic impact of transportation improvement, we analyze the interrelationship between travel time savings and regional output and income. The economic impact analysis under the CGE framework reveals how transportation facilities and systems affect firm and household behavior and therefore induce changes in the production and consumption of commodities and transportation services. The proposed theoretical model was tested by using data from the 2005 IO tables of each subregion and the 2006 transport flow dataset issued by the Ministry of Land, Infrastructure, Transport, and Tourism in Japan. As a result, the paper confirms the positive effect of transportation investment on the total output and income of the studied region. Specifically, we found that while economic benefits typically appear in urban areas, rural areas can still potentially benefit from transportation improvement projects.

Is the RCEP a Cornerstone or Just Collaboration? Regional General Equilibrium Model Based on GAMS

  • Ahmed, Yosri Nasr;Delin, Huang;Reeberg, Benito Giovanni;Shaker, Victor
    • Journal of Korea Trade
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    • v.24 no.1
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    • pp.171-207
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    • 2020
  • Purpose - This paper investigates the potential effect of the Regional Comprehensive Economic Partnership (RCEP) on trade liberalization among member countries in order to answer key questions in our research on whether the RCEP will be a cornerstone or just collaboration. Furthermore, it aims to measure the likely magnitude of the economic impact it has on its members. Design/methodology - Toward achieving research objectives, we developed a regional CGE model based on the GTAP 9 database. Findings - The simulation results show Korea, Australia, India, and Japan ranked the top countries with an average growth in GDP of 0.38 %, 0.36%, 0.29%, and 0.23%, respectively. Moreover, China and New Zealand followed with a percentage of 0.12% each. The lower economic performing group is the ASEAN group due to a contraction in GDP by 0.13%. Accordingly, there was a positive impact of the RCEP agreement on all member states, as empirically demonstrated. Furthermore, Korea is one of the countries that will benefit most from joining this agreement. Finally, this agreement is important; it has many economic benefits to member states, but it is not a cornerstone. Originality/value - The examination of the quantitative effects of tariff removal among the RCEP's countries is its value. We will address all member countries of the convention simultaneously using a regional CGE model GAMS language, where we employed a Mathematical Programming System for General Equilibrium (MPSGE) to establish a Regional CGE model. This study is directed to policymakers looking at evaluating RCEP agreement.

The Regional Comprehensive Economic Partnership in East Asia and Its Economic Effects: A CGE Approach (CGE모형을 이용한 동아시아 역내포괄적경제동반자협정(RCEP)의 경제적 영향 분석)

  • Ko, Jong-Hwan
    • International Area Studies Review
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    • v.17 no.4
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    • pp.1-21
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    • 2013
  • This study aims at conducting a quantitative assessment of potential economic effects of the Regional Comprehensive Economic Partnership (RCEP) consisting of 10 Member States of the ASEAN, Australia, China, India, Japan, Korea and New Zealand using a multi-region, multi-sector CGE model. Three different policy scenarios are carried out based on baseline scenarios: China-Japan-Korea FTA (Scenario 1); ASEAN+3 FTA (Scenario 2); and the RCEP (Scenario 3). The impacts of three scenarios are described in terms of real GDP, Equivalent Variation as a measure of welfare, export and import volumes, trade balance, and terms of trade. This study finds that the RCEP is to lead to an increase in real GDP of all members of the RCEP, with Korea as a winner with a highest additional economic growth of 2.43 percent, which implies that Korea is in a better position to play a leading role in promoting the RCEP.

A Free Trade Area of the Asia Pacific (FTAAP): Is It Desirable?

  • Kim, Sangkyom;Park, Innwon;Park, Soonchan
    • East Asian Economic Review
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    • v.17 no.1
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    • pp.3-25
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    • 2013
  • This paper evaluates whether the proposed FTAAP is a desirable policy option for APEC member economies and the world economy. More specifically, this paper qualitatively investigates whether the FTAAP satisfies conditions for a trade bloc to generate positive and sufficient net trade creation effect. In addition, this paper estimates the likely impact of the FTAAP by using a CGE model analysis. From the qualitative analysis based on statistical data, this paper strongly argues that the FTAAP can be a desirable regional trade bloc able to generate positive gains from freer trade. From the ex-ante scenario analysis using both static and capital accumulation CGE Models, this paper concludes that the FTAAP has great potential for improving welfare of participating APEC economies and will boost economic growth in the region. In particular, the FTAAP would be even better if it can be linked with liberalization of trade in services and enhanced trade facilitation.

Optimal Demand for Road Investment (도로부문의 적정 투자규모 추정)

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

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Analyzing the Effects on Korean Regional Economy-Energy-Environment Gaps of GFGs Reduction (온실가스 감축의 지역간 격차 영향 분석)

  • Kim, Jae Hyun;Jeong, Kiho
    • Environmental and Resource Economics Review
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    • v.20 no.2
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    • pp.199-228
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    • 2011
  • In this study, the effect on the economy-energy-environment gap among regions of reducing GHGs is analyzed under various scenarios, using a multiregional dynamic CGE model. Regions in Korea are classified as six metropolitan areas. Scenarios are set in three cases such as self-regulatory measures, carbon tax and emissions trading scheme. The reduction target under each scenario is again classified according to volume basis and intensity basis. In results, self-regulation is shown to deepen the economic divide mostly, followed by a carbon tax, emissions trading scheme in order. This result could be interpreted such that a system based on market incentives gives less effect on the gap among regions. However, market incentives based system is expected to take time to build. Thus in implementing policies to increase short-term effects of the reduction targets, complementary policies are needed to reduce the regional devide.

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Post-TPP Trade Policy Options for ASEAN and its Dialogue Partners: "Preference Ordering" Using CGE Analysis

  • Ji, Xianbai;Rana, Pradumna B.;Chia, Wai-Mun;Li, Changtai
    • East Asian Economic Review
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    • v.22 no.2
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    • pp.177-215
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    • 2018
  • Trump's withdrawal from the Trans-Pacific Partnership (TPP) and his "America First" trade agenda ignite a second round of interest in mega-free trade agreements in the Asia-Pacific. Countries are evaluating alternative trade policy actions in a post-TPP era. Using national real GDP gains estimated by a modified GTAP model to construct "preference ordering" for 10 Association of Southeast Asian Nations members and their six regional dialogue partners, this paper comes up with several policy-oriented findings. First, when multilateral agreements are not possible, countries are better off with a regional trading agreement than without one. Second, the Regional Comprehensive Economic Partnership is likely to have higher beneficial impacts than the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Third, for dual-track countries, implementing both agreements is better than each separately. Fourth, impacts of open regionalism are likely to be higher than those of a closed and reciprocal one. Going forward, this paper argues that countries should adopt a "multi-track, multi-stage" approach to trade policy.

Re-Evaluation of Free Trade Agreement: Changes in Global Value Chain and Regional Value Contents

  • Lim, Byeong-Ho;Ji, Seong-Tae;Yoo, Jeong-Ho
    • Journal of Korea Trade
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    • v.26 no.2
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    • pp.65-83
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    • 2022
  • Purpose - The purpose of this study is to evaluate the economic effects of FTAs using the concept of value-added exports. So far, the economic effects of FTAs have been dependent on decrease in import prices due to tariff cuts in importing countries, but the actual tariff reduction need to consider the value added of the exporting countries. Design/methodology - Value-added export refers to the added value created in the exporting country out of total exports. Among value-added exports, direct value-added export is interpreted as the Regional Value Contents (RVC), from which the economic effect of the FTA can be analyzed. A modified GTAP-VA model takes into account RVC in order to estimate accurate effects of FTAs. Findings - By the re-evaluation of the FTA based on the RVC, this paper makes it clear that the economic effects of the existing FTA methodology have the possibility of overestimation. In addition, as a new FTA with a strengthened Rules of Origin (ROO) is being initiated, a negative impact on international trade and GVC utilization may occur. Originality/value - This study introduces the concept of value-added export in analyzing the effects of FTAs. The new analysis methodology of this paper emphasizes the importance of value-added exports. Re-organization of GVCs would change regional trade agreements and empower ROO by weakening existing GVCs and transforming the value chain from global into regional scope.

The Impact of the Introduction of Hydrogen Energy into the Power Sector on the Economy and Energy (전력부문 수소에너지 도입의 경제 및 에너지부문 파급효과)

  • Lee, Sang-Ho
    • Journal of the Korea Academia-Industrial cooperation Society
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    • v.17 no.8
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    • pp.502-507
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    • 2016
  • The transition from a carbon economy based on fossil fuels to a hydrogen economy is necessary to ensure energy security and to combat climate change. In order to pursue the transition to a hydrogen economy while achieving sustainable economic growth, a preliminary study into the establishment of the necessary infrastructure for the future hydrogen economy needs to be carried out. This study addresses the economic and environmental interactions in a dynamic computable general equilibrium (CGE) model focusing on the economic effects of the introduction of renewable energy into the Korean energy system. Firstly, the introduction of hydrogen results in an increase in the investment in hydrogen production and the reduction of the production cost, ultimately leading to GDP growth. Secondly, the mandatory introduction of renewable energy and associated government subsidies bring about a reduction in total demand. Additionally, the mandatory introduction of hydrogen energy into the power sector helps to reduce CO2 emissions through the transition from a carbon economy-based on fossil energy to a hydrogen economy. This means that hydrogen energy needs to come from non-fossil fuel sources in order for greenhouse gases to be effectively reduced. Therefore, it seems necessary for policy support to be strengthened substantially and for additional studies to be conducted into the production of hydrogen energy from renewable sources.