IDEAS home Printed from https://ideas.repec.org/a/gta/jnlgea/v7y2022i1p76-103.html
   My bibliography  Save this article

Endogenous Capital Utilization in CGE Models: A Mongolian Application with the PEP-1-1 Model

Author

Listed:
  • Ragchaasuren Galindev
  • Bernard Decaluwe

Abstract

This paper extends the PEP-1-1 model (a static computable general equilibrium, or CGE, model for small open economies) to incorporate variable capital utilization. It argues that CGE models with fixed sectoral capital may underestimate the impact of shocks in the short run by ignoring industries’ adjustment of their capital utilization rate (or intensity of use) in response to changes in their economic environment. The model is calibrated to a 2014 Mongolian social accounting matrix. An increase in the export price of coal is considered as a shock for demonstration purposes. Compared to the standard PEP-1-1 model the impact of the shock is larger in the expanded model. In addition, the results of the PEP-1-1 model are derived as a special case of the model involving capital utilization.

Suggested Citation

  • Ragchaasuren Galindev & Bernard Decaluwe, 2022. "Endogenous Capital Utilization in CGE Models: A Mongolian Application with the PEP-1-1 Model," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 7(1), pages 76-103, June.
    • Handle: RePEc:gta:jnlgea:v:7:y:2022:i:1:p:76-103
    DOI: https://doi.org/10.21642/JGEA.070103AF
    as

    Download full text from publisher

    File URL: https://jgea.org/ojs/index.php/jgea/article/view/126/156
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.21642/JGEA.070103AF?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gta:jnlgea:v:7:y:2022:i:1:p:76-103. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jeremy Douglas (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.