Cao Jing, Mun S. Ho, and Wenhao Hu. 2020. “
Analyzing carbon price policies using a general equilibrium model with household energy demand functions.” In Measuring Economic Growth and Productivity: Foundations, KLEMS Production Models, and Extensions,
edited by Barbara Fraumeni. Cambridge, MA: Academic Press.
Publisher's VersionAbstractMulti-sector general equilibrium models are used to simulate the effects of environmental policies on industry output and consumption at disaggregated levels. The specification of household demand in such models often use simpler forms such as CES or Linear Expenditure Systems since there are few estimates of more flexible systems. We estimate a 2-stage translog utility function that explicitly accounts for detailed energy expenditures to allow us to capture the price and income effects more accurately than these simpler forms. We incorporate this into a China growth model to simulate the effects of a carbon price to achieve the government targets for the Climate Change (Paris) agreements.
Jing Cao, Mun S. Ho, Wenhao Hu, and Dale Jorgenson. 2020. “
Effective labor supply and growth outlook in China.” China Economic Review, 61, Pp. 101398.
Publisher's VersionAbstractThe falling projections of working-age population in China has led to predictions of much slower economic growth. We consider three mechanisms that could contribute to higher effective labor supply growth – further improvement in educational attainment due to cohort replacement and rising college enrollment, improvement in aggregate labor quality due to urbanization, and higher labor force participation due to later retirement. We find that these factors result in a projected growth rate of effective labor input of 0.40% for 2015-2030 compared to -0.60% for working age population. As a result, the projected growth rate of GDP will be 5.80% for 2015-2030 compared to 5.23% if these factors are ignored.
Richard Goettle, Mun S. Ho, and Peter Wilcoxen. 2020. “
Emissions accounting and carbon tax incidence in CGE models: bottom-up versus top-down.” In Measuring Economic Growth and Productivity: Foundations, KLEMS Production Models, and Extensions,
edited by Fraumeni, B, 1st ed. Cambridge, MA: Academic Press.
Publisher's VersionAbstractMulti-sector general equilibrium models are the work-horses used to analyze the impact of carbon prices in climate policy discussions. Such models often have distinct industries to represent coal, liquid fuels, and gas production where the output over time is represented by quantity and price indexes. The industries that buy these fuels, however, do not use a common homogenous quantity (e.g., steam coal vs. metallurgical coal) and have distinct purchasing price indexes. In accounting for energy use or CO2 emissions, modelers choose to attach coefficients either bottom-up to a sector specific input index or top-down to an average output index and this choice has a direct bearing on the incidence of carbon taxation. We discuss how different accounting methods for the differences in prices can have a large effect on the simulated impact of carbon prices. We emphasize the importance for modelers to be explicit about their methods.
Jing Cao, Mun S. Ho, Wenhao Hu, and Dale W. Jorgensen. 2020. “
Estimating flexible consumption functions for urban and rural households in China.” China Economic Review, 61, Pp. 101453.
Publisher's VersionAbstractThere are few comprehensive studies of household consumption in China due to data restrictions. This prevents the calculation of inequality indices based on consumption. Secondly, this makes a comprehensive analysis of policies that affect consumption difficult; economy-wide models used for analysis often have to employ simple consumption forms with unit income elasticities. We estimate a translog demand system distinguished by demographic characteristics, giving price and income elasticities that should be useful for policy analysis. We estimate separate functions for urban and rural households using household expenditure data and detailed commodity prices (1995-2006). This allows future analysis of social welfare and inequality based on consumption to supplement existing studies based on income. To illustrate an application of the model, we project consumption composition based on projected prices, incomes and demographic changes – aging, education improvement and urbanization.
Mun Ho, Wolfgang Britz, Ruth Delzeit, Florian Leblanc, Roson Roberto, Franziska Schuenemann, and Matthias Weitzel. 2020. “
Modelling consumption and constructing long-term baselines in final demand.” Journal of Global Economic Analysis, 5.
Publisher's VersionAbstractModelling and projecting consumption, investment and government demand by detailed commodities in CGE models poses many data and methodological challenges. We review the state of knowledge of modelling consumption of commodities (price and income elasticities and demographics), as well as the historical trends that we should be able to explain. We then discuss the current approaches taken in CGE models to project the trends in demand at various levels of commodity disaggregation. We examine the pros and cons of the various approaches to adjust parameters over time or using functions of time and suggest a research agenda to improve modelling and projection. We compare projections out to 2050 using LES, CES and AIDADS functions in the same CGE model to illustrate the size of the differences. In addition, we briefly discuss the allocation of total investment and government demand to individual commodities.