A MULTI-OBJECTIVE APPROACH TO DEFINING EFFECTIVE POLICIES TO RELEASE THE STRUCTURAL CHANGE IN A COMPUTABLE GENERAL EQUILIBRIUM MODEL.

Authors

  • Walid Laib Department of Economic, Mohammed El Bachir El Ibrahimi of Bordj Bou Arreridj University, .LIZENRU Laboratory – Algeria

Keywords:

Structural change, Optimal economic policies, CGEM, GAMS

Abstract

The aim of this article is to suggest changes to the economic policies of Algeria in order to address the structural imbalance in its economy. The goal is to shift from an economy that relies heavily on oil prices to a more stable and balanced production structure that promotes economic development. Using the CGEM model applied to the Algerian economy through GAMS, this article conducted a simulation of economic policies. The results of the simulation showed improvements in the production group and the demand for factors across all sectors, particularly agriculture and industry. Positive changes estimated at between 10% and 60% were recorded in all sectors. Moreover, this package of policies had a positive impact on exports outside the oil sector. Exports in the industrial sector increased positively by 128%, while those in the agricultural sector increased by 29%. These findings indicate that Algeria has enormous potential and comparative advantages in these sectors. If protected in the current period, they could emerge as strong sectors and contribute significantly to the country’s economic growth.

Downloads

Download data is not yet available.

References

Narayanan, B. G., & Walmsley, T. L. (2008). Global trade, assistance, and production: the GTAP 7 data base. Center for global trade analysis, Purdue University, 134.

Hosoe, N., Gasawa, K., & Hashimoto, H. (2010). Textbook of computable general equilibrium modeling: programming and simulations. Springer.

André, F. J., & Cardenete, M. A. (2009). Defining efficient policies in a general equilibrium model: a multi-objective approach.Socio-Economic Planning Sciences, 43(3), 192–200. https://doi.org/10.1016/j.seps.2008.11.001

Ashimov, A. A., Borovskiy, Y. V., Novikov, D. A., Sultanov, B. T., &Onalbekov, M. A. (2020). Macroeconomic Analysis and Parametric Control Based on Global Multi-country Dynamic Computable General Equilibrium Model (Model 1). In Macroeconomic Analysis and Parametric Control of a Regional Economic Union (pp. 73–201). Springer International Publishing. https://doi.org/10.1007/978-3-030-32205-2_2

Richard Rosenthal, T. E. (2007). GAMS-A User’s Guide.GAMSDevelopmentCorporation,WashingtonDC,USA.

Chen, L. ,& P. R. (2023). Dynamic Modeling of Technological Disruptions in CGE Frameworks. Economic Modelling, 45(02), 301–308.

Chen, P. (2008). Equilibrium Illusion, Economic Complexity and Evolutionary Foundation in Economic Analysis. Evolutionary and Institutional Economics Review, 5(1), 81–127. https://doi.org/10.14441/eier.5.81

Choi, S. C. T. (2015). A Complementarity Approach to Solving Computable General Equilibrium Models. Computational Economics, 46(2), 305–323. https://doi.org/10.1007/s10614-014-9462-7

Decaluwé Bernard et autres. (2001). la politique économique du développement et les modèlesd’équilibregénéral calculable (les presses de l’université de Montréal, Ed.).

fofana Ismail. (2007).Elaborerune Matrice de ComptabilitéSocialePour l’Analysed’Impacts des Chocs et Politiques Macroéconomiques.Réseau de Recherche Sur Les Politiques Economiques de Réduction de La Pauvreté (PEP).

Garbaccio, R. F. (1995). Price reform and structural change in the Chinese economy: policy simulations using a CGE model. China Economic Review, 6(1), 1-34.

Garcia, A. , et al. (2022). Sectoral Interactions and Structural Change Dynamics. Journal of Economic Dynamics and Control, 38(04), 511–529.

Ginsburgh, V., & Keyzer, M. (2002). The structure of applied general equilibrium models. MIt Press.

Go, D. S., Lofgren, H., Ramos, F. M., & Robinson, S. (2016). Estimating parameters and structural change in CGE models using a Bayesian cross-entropy estimation approach. Economic Modelling, 52, 790–811. https://doi.org/10.1016/j.econmod.2015.10.017

Hertel, T. W. ,& T. M. E. (1997). Global Trade Analysis: Modeling and Applications. Cambridge University Press., 5–94.

Hu, H., Dong, W., & Zhou, Q. (2021). A comparative study on the environmental and economic effects of a resource tax and carbon tax in China: Analysis based on the computable general equilibrium model. Energy Policy, 156. https://doi.org/10.1016/j.enpol.2021.112460

Narayanan, B. G., & Walmsley, T. L. (2008). Global trade, assistance, and production: the GTAP 7 data base. Center for global trade analysis, Purdue University, 134.

Hosoe, N., Gasawa, K., & Hashimoto, H. (2010). Textbook of computable general equilibrium modeling: programming and simulations. Springer.

André, F. J., & Cardenete, M. A. (2009). Defining efficient policies in a general equilibrium model: a multi-objective approach.Socio-Economic Planning Sciences, 43(3), 192–200. https://doi.org/10.1016/j.seps.2008.11.001

Ashimov, A. A., Borovskiy, Y. V., Novikov, D. A., Sultanov, B. T., &Onalbekov, M. A. (2020). Macroeconomic Analysis and Parametric Control Based on Global Multi-country Dynamic Computable General Equilibrium Model (Model 1). In Macroeconomic Analysis and Parametric Control of a Regional Economic Union (pp. 73–201). Springer International Publishing. https://doi.org/10.1007/978-3-030-32205-2_2

Richard Rosenthal, T. E. (2007). GAMS-A User’s Guide.GAMSDevelopmentCorporation,WashingtonDC,USA.

Chen, L. ,& P. R. (2023). Dynamic Modeling of Technological Disruptions in CGE Frameworks. Economic Modelling, 45(02), 301–308.

Chen, P. (2008). Equilibrium Illusion, Economic Complexity and Evolutionary Foundation in Economic Analysis. Evolutionary and Institutional Economics Review, 5(1), 81–127. https://doi.org/10.14441/eier.5.81

Choi, S. C. T. (2015). A Complementarity Approach to Solving Computable General Equilibrium Models. Computational Economics, 46(2), 305–323. https://doi.org/10.1007/s10614-014-9462-7

Decaluwé Bernard et autres. (2001). la politique économique du développement et les modèlesd’équilibregénéral calculable (les presses de l’université de Montréal, Ed.).

fofana Ismail. (2007).Elaborerune Matrice de ComptabilitéSocialePour l’Analysed’Impacts des Chocs et Politiques Macroéconomiques.Réseau de Recherche Sur Les Politiques Economiques de Réduction de La Pauvreté (PEP).

Garbaccio, R. F. (1995). Price reform and structural change in the Chinese economy: policy simulations using a CGE model. China Economic Review, 6(1), 1-34.

Garcia, A. , et al. (2022). Sectoral Interactions and Structural Change Dynamics. Journal of Economic Dynamics and Control, 38(04), 511–529.

Ginsburgh, V., & Keyzer, M. (2002). The structure of applied general equilibrium models. MIt Press.

Go, D. S., Lofgren, H., Ramos, F. M., & Robinson, S. (2016). Estimating parameters and structural change in CGE models using a Bayesian cross-entropy estimation approach. Economic Modelling, 52, 790–811. https://doi.org/10.1016/j.econmod.2015.10.017

Hertel, T. W. ,& T. M. E. (1997). Global Trade Analysis: Modeling and Applications. Cambridge University Press., 5–94.

Hu, H., Dong, W., & Zhou, Q. (2021). A comparative study on the environmental and economic effects of a resource tax and carbon tax in China: Analysis based on the computable general equilibrium model. Energy Policy, 156. https://doi.org/10.1016/j.enpol.2021.112460

Jafari, Y., Britz, W., Guimbard, H., & Beckman, J. (2021). Properly capturing tariff rate quotas for trade policy analysis in computable general equilibrium models. Economic Modelling, 104. https://doi.org/10.1016/j.econmod.2021.105620

Li, K. ,& W. H. (2022). Incorporating Heterogeneity in CGE Models: Implications for Structural Change. Review of Economics and Statistics, 20(1), 125–143.

Lofgren, H. (Economist), Harris, R. L., & Robinson, Sherman. (2002). A standard computable general equilibrium (CGE) model in GAMS. International Food Policy Research Institute.

Conrad, K. (2001). Computable general equilibrium models in environmental and resource economics. Discussion Papers/Institut für Volkswirtschaftslehre und Statistik, 601.

Nguyen, T. ,& S. J. (2023). Climate Policy and Economic Structural Transformation. Economic Policy, 28(3), 401–420.

Santos, J. (2020). Using input-output analysis to model the impact of pandemic mitigation and suppression measures on the workforce. In Sustainable Production and Consumption (Vol. 23, pp. 249–255). Elsevier B.V. https://doi.org/10.1016/j.spc.2020.06.001

Santos, M. S. (2004). Simulation-based estimation of dynamic models with continuous equilibrium solutions. Journal of Mathematical Economics, 40(3–4), 465–491. https://doi.org/10.1016/j.jmateco.2003.12.003

Taylor, L. (2016). CGE applications in development economics. Journal of Policy Modeling, 38(3), 495–514. https://doi.org/10.1016/j.jpolmod.2016.02.010

Varga, J., Roeger, W., & in ’t Veld, J. (2022). E-QUEST: A multisector dynamic general equilibrium model with energy and a model-based assessment to reach the EU climate targets. Economic Modelling, 114. https://doi.org/10.1016/j.econmod.2022.105911

Downloads

Published

2024-04-03

How to Cite

Laib, W. . (2024). A MULTI-OBJECTIVE APPROACH TO DEFINING EFFECTIVE POLICIES TO RELEASE THE STRUCTURAL CHANGE IN A COMPUTABLE GENERAL EQUILIBRIUM MODEL. The Journal of Contemporary Issues in Business and Government, 30(2), 1–17. Retrieved from https://cibgp.com/au/index.php/1323-6903/article/view/2798