A General Equilibrium Evaluation of Aggregate Welfare Effects from Improved Sectoral Efficiency . Empirical Evidence for Norway
AbstractThis paper discusses and shows how a CGE model can be used to assess welfare effects of structural policy reforms targeting inefficiency problems at micro levels that normally are not captured in operational CGE-models. The CGE approach allows computation of shadow prices which are generally both unobservable due to various price distortions, and endogenous. Moreover, the paper discusses how static measures of sectoral inefficiency can be implemented in a CGE-model that accounts for real world dynamics. Results from CGE-simulations suggest that general equilibrium effects have substantial influence on welfare, at least when the initial waste of resources is as large as reported in sector studies for Norway. More precisely, compared to the CGE-estimate a partial equilibrium approach overestimates the welfare gain by more than 30 percent.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 224.
Date of creation: Aug 1998
Date of revision:
Structural reform; Efficiency gains; General equilibrium effects;
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General
- L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
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