Despite the prevalence of computable general equilibrium (CGE) models applied to tax changes of varying types, little work has been done focusing on state level comprehensive tax reform or on tax reform in countries undergoing a regime change. This research develops and applies methodologies for analyzing fiscal policy changes under these two very different economic scenarios. The findings for each application are relevant to policy makers as they weigh the effects of tax reform. The models developed for the two scenarios offer guidance to future modelers in studying similar economies and the contrast of the two provides a framework for thinking about model design and application. Finally, the results, when compared to each other, allow us to see the relative effectiveness of the two tax reform policies given their very different economies.

Chapter 1: Interregional Transfers through Public Pension in Canada- In this chapter, I build a regional computable general equilibrium model with an overlapping generations (OLG) structure of the Canadian economy to analyze population aging dynamics and public pensions. Canada is divided into three regions: Atlantic, Quebec and Rest of Canada (ROC). The impact of population aging is investigated on each of three regions' pension systems. The results confirm that as a result of aging all regions are affected negatively if they choose to have an independent pension system. Under a joint pension system most of the pressure of the provision of the pension system is on the ROC. Atlantic region benefits the most from a joint pension plan as the implicit funds ow from ROC to Atlantic region. Quebec benefits from having its own program, but the benefits disappear slowly in future years. Chapter 2: Age-Variable Rate of Time Preference in CGE-OLG Model- Contrary to the mainstream studies in the area of intertemporal optimization that assume a constant rate of time preference over individuals' life cycles, in this chapter I propose a new approach to measure the rate of time preference by assuming that the rate of time preference evolves by age. I construct an overlapping generations model (OLG) and calibrate rate of time preference. The age-variable rate of time preference would permit to capture many other elements that affect the life cycle profile of consumption as observed in the data. The results show that rate of time preference exhibits three phases and is different for young versus old. Chapter 3: Computing Demographic Change Simulation under Constant and Age-variable Rate of Time Preference - This chapter simulates the impact of an aging population on various macroeconomic variables and calculates the cohort welfare as well as social welfare. The outcomes from simulations are dependent on the choice of rate of time preference as well as the structure of the model. The results in this chapter provide a new approach to determining the impact of aging population. The choice of a realistic rate of time preference, which allows its variability by age, affects the cohort welfare noticeably.

The thesis evaluates three revenue neutral mixes of political measures aimed at the support of utilization of biofuels in the Czech Republic. The dynamic computable general equilibrium model with three aggregated sectors and two types of households is applied for evaluation of relevant environmental and economic impacts. The hypothetic price subsidy of utilization of energy biomass in production of the first generation biofuels fulfilling sustainability criteria is chosen as the basic supportive tool. The revenue neutrality is satisfied via adequate increase in tax rates in three different alternative scenarios (via labor tax, motor fuel tax, and standard value added tax). The results indicate that at the current price level of crude oil even relatively high level of price subsidy is not sufficient in fulfilling the emission and biofuel share targets presumed by European Commission. Therefore, for attaining the biofuel share target high percentage first generation biofuels and second and third generation biofuels have to be utilized. Furthermore, for the fulfilling of emission targets other alternative fuels have to be utilized as well. The results finally reveal that environmentally most efficient mix is the price subsidy compensated via an increase in the motor fuel tax, economically most...

The thesis evaluates three revenue neutral mixes of political measures aimed at the support of utilization of biofuels in the Czech Republic. The dynamic computable general equilibrium model with three aggregated sectors and two types of households is applied for evaluation of relevant environmental and economic impacts. The hypothetic price subsidy of utilization of energy biomass in production of the first generation biofuels fulfilling sustainability criteria is chosen as the basic supportive tool. The revenue neutrality is satisfied via adequate increase in tax rates in three different alternative scenarios (via labor tax, motor fuel tax, and standard value added tax). The results indicate that at the current price level of crude oil even relatively high level of price subsidy is not sufficient in fulfilling the emission and biofuel share targets presumed by European Commission. Therefore, for attaining the biofuel share target high percentage first generation biofuels and second and third generation biofuels have to be utilized. Furthermore, for the fulfilling of emission targets other alternative fuels have to be utilized as well. The results finally reveal that environmentally most efficient mix is the price subsidy compensated via an increase in the motor fuel tax, economically most...

Ethiopia is one of the most vulnerable countries to climate change. This is because its important economic sector, agriculture, is virtually rain-fed. The role of the sector in the current economic structure and the potency of the anticipated biophysical impacts of climate change necessitates proactive adaptation in agriculture. This, however, breeds questions of adaptation costs and adaptation finance. This study attempts to derive plausible range of planned adaptation costs in agriculture along with their economy-wide and regional effects in Ethiopia. It also assess the economy-wide and regional effects of the likely options available to a government of a least-developed country to finance adaptation in agriculture. The results show that planned public adaptation in agriculture puts pressure on government surplus, impedes on manufacturing and private services, and GDP of urbanized regions. As such, it may strain the current macroeconomic endeavors of the country which puts government driven structural transformation and reducing fiscal deficit relative to GDP at the center. Government of Ethiopia may reconcile this by laying out incentives to urban agriculture and private investment in agriculture. Besides, foreign support in the form of biotechnology transfer and debt-relief may help to control the side effects of grants on foreign exchange market and trade balance.

Quantifying the economic effects of climate change is a crucial step for planning adaptation in developing countries. This study assesses the economy-wide and regional effects of climate change induced productivity and labor supply shocks in agriculture in Ethiopia. The study shows, in worst case scenario, the effects on national GDP may add up to -8% with uneven regional effects ranging from -10% in agrarian regions (e.g. Amhara) to +2.5% in urbanized regions (e.g. Addis Ababa). Cost-free exogenous structural change scenarios in labor markets and transaction costs may offset about 20-30% of the ripple effects of climate change. Therefore, the ongoing structural transformation in the country may underpin the resilience of the economy to climate change. Nevertheless, given the role of agriculture in the current economic structure of the country and the potency of biophysical impacts of climate change, adaptation in the sector is indispensable. Otherwise, climate change may hamper economic progress of the country, and make rural livelihood unpredictable.

Quantifying the economic effects of climate change is a crucial step for planning adaptation in developing countries. This study assesses the economy-wide and regional effects of climate change induced productivity and labor supply shocks in agriculture in Ethiopia. The study shows, in worst case scenario, the effects on national GDP may add up to -8% with uneven regional effects ranging from -10% in agrarian regions (e.g. Amhara) to +2.5% in urbanized regions (e.g. Addis Ababa). Cost-free exogenous structural change scenarios in labor markets and transaction costs may offset about 20-30% of the ripple effects of climate change. Therefore, the ongoing structural transformation in the country may underpin the resilience of the economy to climate change. Nevertheless, given the role of agriculture in the current economic structure of the country and the potency of biophysical impacts of climate change, adaptation in the sector is indispensable. Otherwise, climate change may hamper economic progress of the country, and make rural livelihood unpredictable.

Die Dissertation befasst sich mit der Erweiterung und Anwendung des allgemeinen räumlichen Gleichgewicht- und Transportmodells RELU-TRAN (Anas und Liu, 2007) und analysiert verschiedene verkehrs- und klimabezogene Politikmaßnahmen (Tempo-30 in Städten, Infrastrukturqualität, Anpassung an den Klimawandel) in einer Stadtökonomie.

This dissertation contains three essays on environmental economics and on credit market imperfections. The literature on carbon tax incidence generally finds that carbon taxes have a regressive impact on the distribution of income. The main reason for that finding stems from the fact that poor households spend a larger share of their total expenditure on energy products than the rich households do. This literature, however, has ignored the impact of carbon taxes on income stemming from changes in relative factor prices. Yet, changes in household welfare depend not only on variations in commodity prices, but also on changes in income. Chapter 1 provides a comprehensive analysis of the distributional impact of carbon taxes on inequality by considering both demand-side and supply-side channels. We use a multi-sector, multi-household general equilibrium model to analyze the distributional impact of carbon taxes on inequality. Using equivalent income as the household welfare metric, we apply the Shapley value and concentration index approaches to decomposing household inequality. Our simulation results suggest that carbon taxes exert a larger negative impact on the income of the rich than that of the poor, and are thereby progressive. On the other hand, when assessed from the use side alone (i.e., commodity prices alone), our results confirm previous findings, whereas carbon taxes are regressive. However, due to the stronger incidence of carbon taxes on inequality from the income side, our results suggest that the carbon tax tends to reduce inequality. These findings further suggest that the traditional approach of assessing the impact of carbon taxes on inequality through changes in commodity prices alone may be misleading. Chapter 2 investigates the economic impacts of creating an emissions bubble between Canada and the US in a context of subglobal participation in efforts to reduce pollution with market based-instruments. One of the advantages of an emissions bubble is that it can be beneficial to countries that differ in their production and consumption patterns. To address the competitiveness issue that arises from the free-rider problem in the area of climate-change mitigation, we consider the imposition of a border tax adjustment (BTA) - a commonly suggested solution in the literature. We develop a detailed multisector and multi-regional general equilibrium model to analyze the welfare, aggregate, sectoral and trade impacts of the formation of an emissions bubble between Canada and the US with and without BTA. Our simulation results suggest that, in the absence of BTA, the creation of the bubble would make both countries better off through a positive terms-of-trade effect, and more importantly, through a significant reduction in Canada’s marginal abatement cost. The benefits of these positive effects would spill over to the non-participating countries, leading them to increase their trade shares in non-emissions-intensive goods. Moreover, the simulation results also indicate that a unilateral implementation of a BTA by any one of the two countries is welfare deteriorating in the imposing country and welfare improving in the other. In contrast, a joint implementation of a BTA by the two countries would make Canada better off and the US worse off. Chapter 3 shows that learning by lending is a potential channel of understanding the business cycle fluctuation under an imperfect credit market. An endogenous link among the learning parameter, lending rates, and the size of investment makes it possible to generate an internal propagation even due to a temporary shock. The main finding of this chapter is the explanation of how ex post non-financial factors such as information losses by individual agents in a credit market may account for a persistence in real indicators such as capital stock and output.

This dissertation contains three essays on environmental economics and on credit market imperfections. The literature on carbon tax incidence generally finds that carbon taxes have a regressive impact on the distribution of income. The main reason for that finding stems from the fact that poor households spend a larger share of their total expenditure on energy products than the rich households do. This literature, however, has ignored the impact of carbon taxes on income stemming from changes in relative factor prices. Yet, changes in household welfare depend not only on variations in commodity prices, but also on changes in income. Chapter 1 provides a comprehensive analysis of the distributional impact of carbon taxes on inequality by considering both demand-side and supply-side channels. We use a multi-sector, multi-household general equilibrium model to analyze the distributional impact of carbon taxes on inequality. Using equivalent income as the household welfare metric, we apply the Shapley value and concentration index approaches to decomposing household inequality. Our simulation results suggest that carbon taxes exert a larger negative impact on the income of the rich than that of the poor, and are thereby progressive. On the other hand, when assessed from the use side alone (i.e., commodity prices alone), our results confirm previous findings, whereas carbon taxes are regressive. However, due to the stronger incidence of carbon taxes on inequality from the income side, our results suggest that the carbon tax tends to reduce inequality. These findings further suggest that the traditional approach of assessing the impact of carbon taxes on inequality through changes in commodity prices alone may be misleading. Chapter 2 investigates the economic impacts of creating an emissions bubble between Canada and the US in a context of subglobal participation in efforts to reduce pollution with market based-instruments. One of the advantages of an emissions bubble is that it can be beneficial to countries that differ in their production and consumption patterns. To address the competitiveness issue that arises from the free-rider problem in the area of climate-change mitigation, we consider the imposition of a border tax adjustment (BTA) - a commonly suggested solution in the literature. We develop a detailed multisector and multi-regional general equilibrium model to analyze the welfare, aggregate, sectoral and trade impacts of the formation of an emissions bubble between Canada and the US with and without BTA. Our simulation results suggest that, in the absence of BTA, the creation of the bubble would make both countries better off through a positive terms-of-trade effect, and more importantly, through a significant reduction in Canada’s marginal abatement cost. The benefits of these positive effects would spill over to the non-participating countries, leading them to increase their trade shares in non-emissions-intensive goods. Moreover, the simulation results also indicate that a unilateral implementation of a BTA by any one of the two countries is welfare deteriorating in the imposing country and welfare improving in the other. In contrast, a joint implementation of a BTA by the two countries would make Canada better off and the US worse off. Chapter 3 shows that learning by lending is a potential channel of understanding the business cycle fluctuation under an imperfect credit market. An endogenous link among the learning parameter, lending rates, and the size of investment makes it possible to generate an internal propagation even due to a temporary shock. The main finding of this chapter is the explanation of how ex post non-financial factors such as information losses by individual agents in a credit market may account for a persistence in real indicators such as capital stock and output.