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 Ophav:
Fredslund, Niels Christian Straarup1, Forfatter
Stephensen, Peter2, Vejleder
Tilknytninger:
1Det Samfundsvidenskabelige Fakultet, Københavns Universitet, København, Danmark, diskurs:7001              
2Økonomisk Institut, Det Samfundsvidenskabelige Fakultet, Københavns Universitet, København, Danmark, diskurs:7014              
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Indhold

Ukontrollerede emneord: Grønland, generellle ligevægtsmodeller, overlappende generationsmodeller
 Abstract: When looking beyond the short and medium run, beyond 2020 say, the Greenlandic policymakers face a considerable dual sustainability problem. Firstly, the agreement for the block grant and other transfers received by Greenland means that any nominal growth over and above that of the Danish inflation rate will phase out the value of the transfers from Denmark relative to the size of the economy. Secondly, a pronounced estimated ageing of the Greenlandic population will significantly increase public expenditure relative to GDP. The significance of this dual problem has previously been well established by both The Economic Council of Greenland and various commissions. By projecting the economic development towards 2040, the estimated sustainability indicator has so far taken on a value of approximately 7 percent of GDP. The first conclusion given in this thesis is that unless some change takes place in period after 2040, simply prolonging the projection period to the year 2100 increases the exact same sustainability indicator from 7 to 18 percent of GDP. This means that in order to maintain the current debt to GDP-ratio in the long run, i.e. to keep fiscal poli-cy on a sustainable path, the Government of Greenland needs to find some way of either cutting an amount of 18 percentage-points of GDP off of public expenditure or increase revenues by the same amount.
A sustainability problem of this magnitude is not easily solved using fiscal policy alone. And so Greenland’s rich underground resources have often been referred to as an alternative solution to the problem. In recent years large-scale projects in Greenland have seemed closer than ever to be-coming a reality, the size of which has never before been seen in Greenland. The projects are ex-pected to contribute to the public finances through corporate taxes and possibly royalties in a great way, but they may also induce increased government spending and affect the economy in a number of different ways. For one thing, it has been argued that the potential gains from the projects are only fully exploited if the projects help increase and qualify the Greenlandic labor force.
On this background the objective of this thesis has been twofold. Firstly to develop a computable general equilibrium model describing the Greenlandic economy and including an overlapping gen-erations-structure of the households, with the purpose of enabling simulations of the dynamic ef-fects following a policy change or an exogenous shock to the economy. The model should particular-ly be suitable for the second objective of the thesis; an assessment of the impact of a specific large scale-project on the fiscal sustainability. In conclusion, the first objective was accomplished with some success while the impact assessment involved a large degree of uncertainty.
During the development phase the DREAM model for the Danish economy was kept in mind as a first-best benchmark and so the present model has been called GREAM, Greenlandic Rational Eco-nomic Agents Model. In comparison with DREAM, the GREAM model is simplified in great many ways. First of all by not being based on a socioeconomic projection of the population but instead simply following a steady state growth path in the baseline. As compensation for this circumstance a number of exogenous adjustment variables have been included in the model to account for the projected changes in the demographic structure. The modeling of the households follows the ap-proach of (Auerbach & Kotlikoff, 1987) in which each generation is represented by an adult who chooses the amount of consumption, leisure and bequest each year over a lifespan of 60 years. The labor supply decision includes not only how much but also in which sector of the economy to work, and whether or not to work at all, i.e. the model includes an endogenous retirement decision. The scientific contribution of the thesis is in that of a number of extensions to the (Auerbach & Kotlikoff, 1987) model primarily to the production side of the economy including multiple private production sectors and a natural resource input in the production process that generates a resource rent. By way of numerous databases from Statistics Greenland including the new product based national accounts and input-output tables and an international comparison of the composition of the re-source extraction sector a consistent Social Accounting Matrix is created for the Greenlandic econ-omy for the year 2011. This matrix is used to calibrate most of the parameters of the model. The assumed growth- and interest rates follow those used by The Economic Council and the remaining parameters describing behavior and technology follow as a starting point those of (Auerbach & Kotlikoff, 1987). The model is programmed in a so-called complementarity format in GAMS follow-ing (Rasmussen & Rutherford, 2004) which enables the use of a pre-designed algorithm for solving large systems of equations including inequalities.
The dynamic properties of the model are described by conducting two kinds of experiments: A tax reform and a large-scale project. Two separate budget neutral tax reforms are simulated from which it is concluded, that a permanent lowering of the wage income tax rate by 5 percentage points will improve the fiscal sustainability by 1,1 percent of GDP if financed by a lowering of the transfers to the households, while the same tax reduction may worsen the fiscal sustainability by 1,1 percent of GDP if replaced by higher consumption and capital income taxes. Both of these tax reforms are found to increase the lifetime welfare of the households as measured by the equivalent variation using the model’s utility measure. While these results qualitatively are in accordance with the literature, the size of the effects depends on the assumed behavioral parameters.
In the second experiment, the resource scenario, a large-scale project is completed in Greenland. The modeling approach to this scenario is to increase the amount of natural resources that are used as inputs in the production in the resource extraction sector. As it has only been possible to solve the model for a very limited number of parameter values and only with a resource increase of one-third the amount needed for the currently most promising project, the Isua mine, no truly robust conclusions were reached from this experiment. Under the feasible parameter values the simula-tions did however hint to only a very small contribution from the large-scale projects to the fiscal sustainability because of an almost one-to-one increase in the public expenditure and a very small induced impact on the economy and the labor supply in particular. If the direct revenues from the project lead to a permanent lowering of the block grant, the project may even increase the fiscal sustainability problem significantly.
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GREAM.pdf (Hovedtekst)
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Copyright dato:
2013-08-02
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Basal

Bogmærk denne post: https://diskurs.kb.dk/item/diskurs:52741:1
 Type: Speciale
Alternativ titel: En overlappende generationsmodel for den grønlandske økonomi
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Detaljer

Sprog: Danish - dan
 Datoer: 2013-05-07
 Sider: -
 Publiceringsinfo: København : Københavns Universitet
 Indholdsfortegnelse: 1. Indledning 8
2. Valg af og afgrænsninger af modellen 11
2.1 Generelle ligevægtsmodeller og makroøkonometriske modeller 11
2.2 Sammenlignelighed med DREAM 13
2.3 Andre modeller for den grønlandske økonomi 15
3. Ikke-teknisk gennemgang af GREAM modellen 18
4. Kalibreringsmodellen 19
4.1 Et øjebliksbillede af økonomien 20
4.2 Makroøkonomiske sammenhænge 24
4.3 Kalibrering af husholdningernes adfærd 26
5. Produktionsmodellen 30
5.1 Husholdninger 31
5.2 Virksomheder 36
5.3 De offentlige finanser 40
5.4 Ligevægtsbetingelser og hjælpeligninger 42
5.5 Fundamentale parametre og grundscenariet 45
6. Dynamiske effekter ved eksogene stød 47
6.1 Skattereform 47
6.2 Ressourcescenarie 53
7. Konklusioner 62
8. Litteratur 65
 Note: -
 Type: Speciale
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