By Jian Xia and Sidney Saltzman
in: Journal of Policy Modeling 22 (4): 453-489 (2000).
September 23, 2000
Nobuhiro Hosoe
Associate Professor
National Graduate Institute for Policy Studies
A survey of environmental CGE model in Section 2 looks useful.
The ESAM will clarify environmental activity/commodity flows well.
Results seem reasonable.
Based on Devarajan S., Lewis, J. D., and S. Robinson (1994) (mimeo?...due to incomplete references. Or it may be equivalent to Devarajan et al. (1990) Journal of Policy Modeling.)
One representative household.
Seven production sectors: agriculture, mining, light industry, energy, heavy industry, construction, and services.
Labor and capital (but their prices are different by sectors which employ them.)
Endogenous unemployment (Renemp) of labor with a "fixed" average wage rate considering its rigidity in China. (c.f., problems demonstrated by Hosoe (forthcoming) Applied Economics Letters.)
Exchange rate is also exogenous.
Three types of pollution: waste water, smog dust, and solid waste (due to the availability of data).
Environmental feedback to utility and cost functions.
Pollution abatement activities and subsidies for them.
Pollution emission tax on produces.
Efforts for pollution abatement by producers (with the fixed coefficient technology)
Waste disposal tax on the household
Environmental investment
Should XDi be called value added or gross output? As long as we assume a fixed coefficient technology for the value added input, in whichever manner we can interpret. However, in Equation (5), PXi and PVAi are applied to XDi. I think that a coefficient should be inserted here. If not, generally speaking, Equation (5) will not hold.
Does GDP mean some in the general equilibrium framework? Furthermore, to what does GDP deflator PINDEX contribute?
Equation (55) should have a typo. A parenthesis "(" must be inserted just after the summation in the first term. Also, the term INTi must be deleted, if this equation does represent GDP (strictly GDE), not distribution of gross output.
Note that because Equation (55) shows the initial value of GDE we do not need price variables inserted just before the corresponding quantity variables.