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The ECOGEM-Chile Model: A CGE Model for Environmental and Trade Policy Analysis

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  • Raúl O’Ryan
  • Carlos J. de Miguel
  • Sebastián Miller

Abstract

Computable General Equilibrium (CGE) models are a powerful economic tool for multidimensional/multisectoral analysis. They improve traditional input-output analysis generating quantities and prices endogenously and reflecting market incentives. They complement partial equilibrium analysis with a broader scope of analysis and the quantification of indirect and often non-intuitive effects. Environmental applications of CGE models include trade and environment, climate change, energy problems, natural resources management and environmental regulation analysis. The ECOGEM-Chile model described in this paper can be used to analyze impacts on macro, sectoral, social and environmental (air, water and land pollutants) variables of different economic, social or/and environmental policies, such as trade policies, environmental taxes, external price shocks, among others. The model incorporates the recently released 1996 input/output matrix as well as the most recent information on wages and income. In the specific application developed here, the model is used to analyze direct and indirect impacts on the Chilean economy of increasing fuel taxes by 100%. Additionally a trade policy of reducing tariffs to compensate the increase in revenues of these taxes is simulated. The tariff reductions are in line with the current Chilean trade policy. Winners and loser from both exercises are identified as well as the main determinants of the results.

Suggested Citation

  • Raúl O’Ryan & Carlos J. de Miguel & Sebastián Miller, 2003. "The ECOGEM-Chile Model: A CGE Model for Environmental and Trade Policy Analysis," Working Papers Central Bank of Chile 247, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:247
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_247.pdf
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    References listed on IDEAS

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    1. O'Ryan, Raúl & Miller, Sebastian & de Miguel, Carlos J., 2003. "A CGE framework to evaluate policy options for reducing air pollution emissions in Chile," Environment and Development Economics, Cambridge University Press, vol. 8(2), pages 285-309, May.
    2. Beghin, John C. & Bowland, Bradley J. & Dessus, Sébastien & Roland-Holst, David & Mensbrugghe, Dominique van der, 2002. "Trade integration, environmental degradation, and public health in Chile: assessing the linkages," Environment and Development Economics, Cambridge University Press, vol. 7(2), pages 241-267, May.
    3. Juan Eduardo Coeymans & Felipe Larraín, 1994. "Efectos de un Acuerdo de Libre Comercio entre Chile y Estados Unidos: Un Enfoque de Equilibrio General," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 31(94), pages 357-400.
    4. Raúl O'Ryan & Carlos J. de Miguel & Sebastián Miller, 2000. "Ensayo sobre equilibrio general computable: Teoría y aplicaciones," Documentos de Trabajo 73, Centro de Economía Aplicada, Universidad de Chile.
    5. Carlo Perroni & Randall M. Wigle, 1994. "International Trade and Environmental Quality: How Important Are the Linkages?," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 551-567, August.
    6. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    7. Kneese, Allen V., 1998. "No time for complacency," Environment and Development Economics, Cambridge University Press, vol. 3(4), pages 491-537, October.
    8. Sébastien Dessus & David Roland-Holst & Dominique van der Mensbrugghe, 1994. "Input-Based Pollution Estimates for Environmental Assessment in Developing Countries," OECD Development Centre Working Papers 101, OECD Publishing.
    9. John Beghin & Sébastien Dessus & David Roland-Holst & Dominique van der Mensbrugghe, 1996. "General Equilibrium Modelling of Trade and the Environment," OECD Development Centre Working Papers 116, OECD Publishing.
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    Cited by:

    1. Marcos Minoru Hasegawa, 2010. "The Tax Policy in the Chilean Economy: a Regional Applied General Equilibrium Analysis," Documentos de Trabajo en Economia y Ciencia Regional 05, Universidad Catolica del Norte, Chile, Department of Economics, revised Dec 2010.
    2. Valdes, Rodrigo & Jara-Rojas, Roberto, 2020. "The impact of commodity price shocks among regional economies of a developing country," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), July.
    3. Rodrigo Valdes & Roberto Jara‐Rojas, 2020. "The impact of commodity price shocks among regional economies of a developing country," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), pages 920-939, July.

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