This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Removing policy based comparative advantage for energy intensive production. Necessary adjustments of the real exchange rate and industry structure

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Torstein Bye, Erling Holmøy and Kim Massey Heide () (Statistics Norway)

Additional information is available for the following registered author(s):

Abstract

National and international expansion of transmission networks and diminishing returns to scale in hydropower capacity expansion has raised the opportunity cost of electricity. The resulting changes in comparative advantage between industries have in many countries been counteracted by government assistance to energy intensive industries. A good example is the implicit electricity price subsidies offered to energy intensive manufacturing in Norway through the state owned power company Statkraft. We use firm data to assess the share of firms that will survive in the long run when these subsidies are removed, highlighting that large cost heterogeneity within the industries may imply diminishing returns to scale at the industry level. This feature is incorporated in a multisectoral CGE model, which is used to estimate the equilibrium adjustments of the industry structure and relative prices of removing the subsidies. Such a policy will lead to a less specialised industry structure and reduces gross trade. The positive public budget effect allows the government to cut other taxes, which fuels the real exchange rate depreciation necessary to meet the national budget constraint.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ssb.no/publikasjoner/DP/pdf/dp462.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 462.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:ssb:dispap:462

Contact details of provider:
Postal: P.O.Box 8131 Dep, N-0033 Oslo, Norway
Phone: (+47) 21 09 00 00
Fax: (+47) 21 09 49 73
Email:
Web page: http://www.ssb.no
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (B Mellemstrand).

Related research
Keywords: Industry policy; Comparative advantage; Structural change;

Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F18 - International Economics - - Trade - - - Trade and Environment
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

This paper has been announced in the following NEP Reports:

This item is featured on the following reading lists:
  1. Technology Assessment
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Torvik, Ragnar, 2001. "Learning by doing and the Dutch disease," European Economic Review, Elsevier, vol. 45(2), pages 285-306, February. [Downloadable!] (restricted)
  2. A. Bovenberg, 1999. "Green Tax Reforms and the Double Dividend: an Updated Reader's Guide," International Tax and Public Finance, Springer, vol. 6(3), pages 421-443, August. [Downloadable!] (restricted)
  3. Klette, T.J., 1998. "Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data," Memorandum 15/1998, Oslo University, Department of Economics.
    Other versions:
  4. Joel Popkin & Kathryn Kobe, 2003. "Securing America's Future," Challenge, M.E. Sharpe, Inc., vol. 46(6), pages 62-109, January. [Downloadable!] (restricted)
  5. Andrew B Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and productivity in international trade," Working Papers 00-08, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  6. Tor Jakob Klette and Arvid Raknerud, 2005. "Heterogeneity, productivity and selection: an empirical study of Norwegian manufacturing firms," Discussion Papers 401, Research Department of Statistics Norway. [Downloadable!]
  7. Wilhelm Kohler & Christian Keuschnigg, 2000. "An incumbent country view on eastern enlargement of the EU Part I: A general treatment," Economics working papers 2000-25, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
    Other versions:
  8. Fabio Ghironi & Marc J. Melitz, 2005. "International Trade and Macroeconomic Dynamics with Heterogeneous Firms," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 865-915, August.
    Other versions:
  9. Adam Hersh & Christian Weller, 2003. "Does Manufacturing Matter?," Challenge, M.E. Sharpe, Inc., vol. 46(2), pages 59-79, March. [Downloadable!] (restricted)
  10. Ben J. Heijdra & Christian Keuschnigg & Wilhelm Kohler, 2001. "Eastern enlargement of the EU: Jobs, investment and welfare in present member countries," Economics working papers 2001-11, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
    Other versions:
  11. Timothy J. Kehoe, 2003. "An Evaluation of the Performance of Applied General Equilibrium Models of the Impact of NAFTA," Levine's Bibliography 506439000000000525, UCLA Department of Economics. [Downloadable!]
    Other versions:
  12. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December. [Downloadable!] (restricted)
    Other versions:
  13. Andrew B. Bernard & Joachim Wagner, 1998. "Export Entry and Exit by German Firms," NBER Working Papers 6538, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. Matsen, Egil & Torvik, Ragnar, 2005. "Optimal Dutch disease," Journal of Development Economics, Elsevier, vol. 78(2), pages 494-515, December. [Downloadable!] (restricted)
    Other versions:
  15. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
    Other versions:
  17. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November. [Downloadable!] (restricted)
    Other versions:
  18. Francois, Joseph & van Meijl, Hans & van Tongeren, Frank, 2003. "Trade Liberalization and Developing Countries Under the Doha Round," CEPR Discussion Papers 4032, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  19. Venables, Anthony J, 1996. "Equilibrium Locations of Vertically Linked Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 341-59, May.
    Other versions:
  20. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
    Other versions:
  21. repec:rus:hseeco:122439 is not listed on IDEAS
  22. Wilhelm Kohler & Christian Keuschnigg, 2000. "An incumbent country view on eastern enlargement of the EU Part II: The Austrian case," Economics working papers 2000-26, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
    Other versions:
  23. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, 04. [Downloadable!] (restricted)
    Other versions:
  24. Aw, Bee Yan & Chung, Sukkyun & Roberts, Mark J, 2000. "Productivity and Turnover in the Export Market: Micro-level Evidence from the Republic of Korea and Taiwan (China)," World Bank Economic Review, Oxford University Press, vol. 14(1), pages 65-90, January.
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Førsund, Finn R. & Hjalmarsson, Lennart, 2008. "Dynamic Analysis of Structural Change and Productivity Measurement," Memorandum 27/2008, Oslo University, Department of Economics. [Downloadable!]
Statistics
Access and download statistics

Did you know? Want to help out with this project? Look for volunteer opportunities.

This page was last updated on 2009-12-10.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.