Impact of COVID-19 on the US and Texas Economy: A General Equilibrium Approach

This paper examines the impact of COVID-19 on the US and Texas economy using a computable general equilibrium model, REMI PI+. We consider three scenarios based on economic forecasts from various sources, including the University of Michigan’s RSQE (Research Seminar in Quantitative Economics), IMF, and the Wi orld Bank. We report a GDP loss of $106 million (a 6% decline) with 1.2 million jobs lost (6.6%) in Texas in 2020. At the national level, GDP loss is $996 billion (a 5% decline) with 11.5 million jobs lost (5.5%) in the same year. By 2026, the aggregate total GDP loss in Texas ranges from $378 to $629 million. The estimated unemployment rate in Texas in 2021 ranges from 5% to 7.7%, depending on modeling assumptions. The granularity of the CGE results allow examination of the most and least impacted industries. Health Care and Social Assistance, Construction, and Accommodation and Food Services incur the most job loss while State and Local Government and Farm will likely see an increase in jobs for 2020. These insights separate our work from most current impact studies.

Dynamic Amazonia: The EU–Mercosur Trade Agreement and Deforestation

The trade agreement between the European Union and the Mercosur countries will increase deforestation in the Mercosur countries and Brazil, in particular, if ratified by member countries. We use a computable general equilibrium model to analyze how trade, land use, and agricultural production will change as a result of the agreement. We then use a statistical model to spatially allocate the predicted deforestation within the Brazilian Amazon. The models estimate that the agreement will cause additional deforestation in Brazil ranging from 56 to 173 thousand ha to accommodate increases in cropland area, depending on the level of governance, use of double-cropping techniques, and trade elasticity parameters. Most additional deforestation in Amazonia would be clustered near current deforestation hotspot areas. Some hotspots threaten the integrity of Indigenous lands and conservation units. Although a low deforestation scenario with gains in welfare is theoretically possible when high governance and multiple-cropping systems are in place, political challenges remain and cast doubt on Brazil’s ability to rein on illegal deforestation.

Estimating the economic impact of large hydropower projects: a dynamic multi-regional computable general equilibrium analysis

In response to rapidly growing energy demands, Chinese authorities plan to invest more in hydropower development. However, there are concerns about the possible effects on macroeconomy. This paper uses SinoTERM, a dynamic multi-regional computable general equilibrium model (CGE) of the Chinese economy, to analyze the economic impact of large hydropower development projects. The model features regional labor market dynamics and an electricity subdivision module with substitutability between various types of electricity generation. The results suggest that hydropower development will boost economic growth in the project region. Most sectors in the project region will benefit from the hydropower development such as other services, health, and education, while some sectors will suffer a loss in output because of the substantial increase in real wages. For the national, every 10,000 yuan investment can drive the national GDP growth of 1,000 yuan, and the cost is expected to be recovered in ten years. By the end of 2040, the real national wage will be around 0.16% higher than the baseline scenario. The project could only be justified if net environmental benefits outweigh this loss.

Economic Implications of the Regional Comprehensive Economic Partnership for Asia and the Pacific

The Regional Comprehensive Economic Partnership (RCEP) presents strong potential to mold regional trade and investment patterns well into the future and to influence the direction of global economic cooperation at a challenging time. This paper evaluates the RCEP’s impact on global and regional incomes, trade, economic structure, factor returns, and employment using a computable general equilibrium model. The results suggest that the RCEP agreement could generate sizable global income gains. Together with the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, the RCEP will also strengthen the region’s manufacturing supply chains, raising productivity and increasing wages and employment.

Macroeconomic and environmental consequences of circular economy measures in a small open economy

This paper investigates the economy-wide impact of the uptake of circular economy (CE) measures for the small open economy (SOE) of Belgium, in particular the impact of fiscal policies in support of lifetime extension through repair activities of household appliances. The impact assessment is completed by means of a computable general equilibrium model as this allows quantification of both the direct and indirect economic and environmental impact of simulated shocks. The results show that different fiscal policy types can steer an economy into a more circular direction. However, depending on the policy type, the impact on the SOE’s macroeconomic structure and level of circularity differs. Furthermore, common claims attributed to a CE (e.g. local job creation or decreased import dependence) can be, but are not always, valid. Hence, policy-makers must prioritize their most important macroeconomic goals and opt for an according fiscal policy. Finally, this paper finds that the CO2 equivalent emissions calculated from a production (or territorial) perspective increase, while they decrease from a consumption perspective. This is explained by the substitution of international activities by local circular activities. This comparative analysis advocates for the consumption approach to assess the CE’s impact on CO2 equivalent emissions.

Projecting Saudi Sectoral Electricity Demand in 2030 Using a Computable General Equilibrium Model

Projecting future demand for electricity is central to power sector planning, as these projections inform capacity investment requirements and related infrastructure expansions. Electricity is not currently economically storable in large volumes. Thus, the underlying drivers of electricity demand and potential market shifts must be carefully considered to minimize power system costs.

The impact of the COVID-19 enforced lockdown and fiscal package on the South African economy and environment: a preliminary analysis

This paper offers a quantitative assessment of the impacts of the COVID-19 pandemic-induced lockdown and government fiscal plan, containing ‘green’ elements on the economy and the environment of South Africa. The analysis uses a dynamic computable general equilibrium model operationalised using a social accounting matrix coupled with a greenhouse gas balance and emissions data. We find that while the economy is harshly impacted by the pandemic in the short term, the government fiscal package ameliorates and cushions the negative effects on poor households. Importantly, an adaptation of the fiscal package towards a ‘greener’ policy achieves the same economic outcome and reduces unemployment. Carbon dioxide emissions decrease in the short run due to economic slowdown. This improvement persists until 2030. These results can be used as decision support for policy makers on how to orient the post COVID-19 policies to be pro-poor and pro-environment, and thus, ‘build back better and fairer’.