A General Equilibrium Evaluation of Aggregate Welfare Effects from Improved Sectoral Efficiency . Empirical Evidence for Norway
This 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.
|Date of creation:||Aug 1998|
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- Holmoy, Erling & Vennemo, Haakon, 1995. "A general equilibrium assessment of a suggested reform in capital income taxation," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 531-556, December.
- Aasness, Jorgen & Biorn, Erik & Skjerpen, Terje, 1993. "Engel Functions, Panel Data, and Latent Variables," Econometrica, Econometric Society, vol. 61(6), pages 1395-1422, November.
- Turnovsky, S.J., 1990.
"Tariffs And Sectoral Adjustments In An Open Economy,"
Discussion Papers in Economics at the University of Washington
90-13, Department of Economics at the University of Washington.
- Turnovsky, Stephen J., 1991. "Tariffs and sectoral adjustments in an open economy," Journal of Economic Dynamics and Control, Elsevier, vol. 15(1), pages 53-89.
- Stephen J. Turnovsky, 1990. "Tariffs and Sectoral Adjustments in an Open Economy," NBER Working Papers 3315, National Bureau of Economic Research, Inc.
- Turnovsky, S.J., 1990. "Tariffs And Sectoral Adjustments In An Open Economy," Working Papers 90-13, University of Washington, Department of Economics.
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