The work presented in this thesis is a collection of four different research projects, conducted at the intersection between academic and industrial fields, and related to the restructuring of the electricity industry. Many models have been proposed to organise restructured electricity systems. We first propose a unified mathematical framework for expressing them, using variational inequalities. This allows the use of existence and uniqueness theorems, but also leads to models that can be solved by existing numerical algorithms. In the second part, we present a model of the European Commission proposals on cross-border trade, in particular access to the network and congestion issues. The model allows for various domestic regulation of the national non-eligible market, and different forms of competition in the eligible market. We illustrate this flexibility on a stylised example, and identify policy issues to be studied in a more realistic case study. The third contribution elaborates on the modelling of imperfect competition on electricity markets, more specifically the integration of imperfect competition behaviours in power models, through conjectural variations. We propose a consistent estimation procedure. Finally, a model of the EU Emission Trading Scheme, limiting the total CO2 emissions, is proposed. We illustrate the effect of some basic economic assumptions on the investment and generation mix, and how these assumptions impact the permit price and affect profitability. The novel part is in the way allocation mechanisms for subsequent commitment periods can potentially distort the behaviour of CO2 emitting agents.

This thesis comprises of six independent chapters, besides the introduction and conclusions, with the common theme of optimal public policies in dynamic general equilibrium models with different kinds of distortions. Broadly speaking, the issues considered are: tax evasion, bureaucratic corruption, costs of tax collection and endogenous probability of survival. With financial repression being modeled via obligatory reserve requirements that banks in the economy need to hold, the second chapter analyzes whether financial repression can be explained by endogenous tax evasion. In this regard the chapter develops two dynamic monetary general equilibrium endogenous growth models. When calibrated to four southern European countries, we indicate that higher degrees of tax evasion emanating from higher corruption and lower penalty rates would result in financial repression as a welfare-maximizing outcome. The third chapter develops an overlapping generations monetary endogenous growth model characterized by tax evasion, and analyzes the effect of the nature of tax evasion on the growth maximizing policies. It is concluded that a growth-maximizing government has to take the behavioral nature of tax evasion into account, since failure to do so will lead to misalignment in not only fiscal but also monetary policies. In fact, the government is found to repress the financial sector more than the optimal level if it treats tax evasion as exogenous. The fourth chapter develops a dynamic general equilibrium overlapping generations monetary endogenous growth model of a financially repressed small open economy characterized by bureaucratic corruption, and uses it to analyze optimal policy decisions of the government following an increase in the degree of corruption. We find that increases in the degree of corruption should ideally result in a fall in seigniorage, as an optimal response of the benevolent government. In addition, higher degrees of corruption should also be accompanied with lower levels of financial repression. Chapter five develops a production-economy overlapping generations model characterized by financial repression, purposeful government expenditures and costly tax collection, to analyze whether ¯nancial repression can be explained by the cost of raising taxes. It is shown that costs of tax collection cannot produce a monotonic increase in the reserve requirements, what are critical, in this regard, are the weights the consumer assigns to the public good in the utility function and the size of the government. Chapter six analyzes the same issues as in the previous chapter, but in a monetary endogenous growth model. We show that higher costs of tax collection produce a monotonic increase in reserve requirements. Moreover, the government tends to rely more on indirect taxation, compared to direct taxation as costs of tax collection increase. The seventh chapter develops a simple monetary pure-exchange two-period overlapping generations model characterized by financial repression and endogenous mortality. The probability of survival of the young agents is assumed to depend upon the share of government expenditure on health, education and infrastructure. In this setting, we analyze the welfare-maximizing policy mix between explicit and implicit taxation for a benevolent government. We show that increases in the survival probability lead to an increase in the reliance on seigniorage as a welfare maximizing outcome. However, for our results to hold, the seigniorage tax base must be large enough for the benevolent planner to use the inflation tax. Each of the chapters aims to provide the theoretical underpinnings behind the design of optimal fiscal and monetary policies under tax evasion, bureaucratic corruption, costs of tax collection and endogenous probability of survival. With each of the models based on proper micro foundations and calibrated to match features of developing economies, the six independent papers attempt to broaden our understanding on public policies in the presence of commonly observed distortions that characterize the developing world. / Thesis (PhD)--University of Pretoria, 2009. / Economics / unrestricted

<p> The overall goal of this thesis is to provide a deeper understanding of the role of dynamic stochastic general equilibrium (DSGE) models as foundations upon which empirical work is conducted. This is a very broad topic with a large existing literature. For this purpose, my dissertation focuses on applying the tools and rich structure of DSGE models to answer questions that have hitherto been studied only by using a reduced-form characterization. I have chosen to look at two specific macroeconomic questions of interest: the economic consequences of oil price shocks in Canada and the role of intangible capital (IC) in explaining cyclical dynamics of S&P500 earnings. Chapter 2 look at the economic consequences of oil price shocks in a structural vector autoregressions (VAR) framework. Chapter 3 builds on this by developing an open economy DSGE model to investigate the impact of oil price shocks on the aggregate Canadian economy and to quantify the relative contribution of U.S. and Canadian monetary policy in transmitting oil price shocks. Chapter 4 studies another interesting macroeconomic phenomenon: the excess volatility of aggregate profits. We embed intangible capital into an otherwise standard real business cycle (RBC) model to examine the role of intangible capital in driving cyclical dynamics of S&P500 earnings. A common feature of my papers is the application of Bayesian time series techniques to macroeconomic data to pursue new insights on "the impact of oil price shocks on economic activities", "the role of monetary policy in transmitting oil price shocks" in new open economic macroeconomics (NOEM) literature and "intangible capital and corporate earnings" in U.S. business cycle literature.</p> / Thesis / Doctor of Philosophy (PhD)

We use a three-country, 14-sector computable general equilibrium (CGE) model to examine the effect of immigration on the labor market, production sectors and the macroeconomy of Austria and Hungary. We analyze the phenomenon of immigration in an empirical model in order to get an idea of the quantitative dimension of the economic problems involved, rather than introduce new integration theory. Our study aims more at the impact of migration than at forecasting future migration flows. (excerpt) / Series: EI Working Papers / Europainstitut

This paper investigates the potential for a carbon tax to induce R&D, and for the consequent induced technical change (ITC) to lower the macroeconomic cost of abating carbon emissions. ITC is modelled within a general equilibrium simulation of the U.S. economy by the effects of emissions restrictions on the level and composition of aggregate R&D, the accumulation of the stock of knowledge, and the industry-level reallocation and substitution of intangible services derived therefrom. Contrary to other authors, I find that ITC's impact is large, positive and dominated by the latter "substitution effect," which mitigates most of the deadweight loss of the tax. / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/). / This research was supported by the Offce of Science (BER), U.S. Department of Energy, Grant No. DE-FG02-02ER63484, and by funding from the MIT Joint Program on the Science and Policy of Global Change, which is supported by a consortium of government, industry and foundation sponsors.

<p> This thesis examines the field performance of the water balance and equilibrium evapotranspiration models, and defines the environmental conditions for which they provided accurate estimates of water loss from a corn crop in Southern Ontario.</p> <p> It is shown that the water balance model should be used only when surface runoff is measured and drainage is negligible. An error analysis indicated that soil moisture change could be estimated within 10 percent when measurements were conducted at six sites every eight days.</p> <p> The equilibrium model predicted daily evapotranspiration within 6 percent when the latent heat exchange utilized between 65 and 80 percent of the available energy, indicating that the model can be applied within temperature limits of 17° and 32°C.</p> / Thesis / Doctor of Philosophy (PhD)

Die Dissertation beschäftigt sich mit den Auswirkungen verschiedener Politikoptionen auf den Weltzuckermarkt. Dazu wird ein räumliches Preisgleichgewichtsmodell wie von Takayama und Judge vorgeschlagen mit hoher Abdeckung von Regionen und Politiken erstellt. Der Vorteil dieses Modelltyps gegenüber den in bisherigen Analysen verwendeten besteht in seiner Fähigkeit, die Annahme der Ursprungshomogenität (im Gegensatz zu Modellen, die auf dem Armington Ansatz basieren) mit der Möglichkeit zu kombinieren, bilaterale Handelsströme explizit abzubilden. Ein wesentlicher Nachteil ist die quasi-normative Natur des Ansatzes. Nach der Einführung wird zunächst in Kapitel zwei der Weltzuckermarkt detailliert beschrieben und von anderen Agrarmärkten abgegrenzt sowie die Anforderungen an ein Gleichgewichtsmodell des Weltzuckermarktes diskutiert. Dann wird im dritten Kapitel eine Übersicht über verschiedene in der Vergangenheit verwendete Modellansätze gegeben und deren Ergebnisse ausgewertet. Im vierten Kapitel wird ein Überblick die theoretische Entwicklung des Modellansatzes gegeben und schließlich das in der Dissertation verwendete Modell beschrieben. Das Modell umfasst 104 Zucker produzierende und 90 Zucker konsumierende Regionen. Nationale Handels- und Agrarpolitiken sowie eine Vielzahl regionaler und präferentieller Handelsabkommen sind im Modell berücksichtigt. Im zweiten Teil von Kapitel vier wird eine Analyse von vier Szenarien mit dem Modell durchgeführt. Diese umfassen eine Fortführung gegenwärtiger Politiken, ein WTO Abkommen, eine einseitige Liberalisierung des Zuckermarktes der EU sowie eine Liberalisierung der Zuckermärkte aller im Modell vertretenen Länder. Im Abschlusskapitel werden einige Kernergebnisse zusammengefasst und eine Weiterentwicklung des Ansatzes diskutiert. Hier wird insbesondere auf das Problem der Quasi-Normativität eingegangen. / The Dissertation at hand investigates the effects of different policy options on the world sugar market. A Spatial Price Equilibrium Model as suggested by Takayama and Judge is established. This model type has one considerable advantage over previously ap-plied types which is its ability to combine the assumption of homogeneous goods regardless of origin (as opposed to Armington-based models) with the possibility to model bilateral trade flows explicitly. One major drawback of the approach is that is behaves in part like a normative model. After the introductory chapter, a detailed description of the world sugar market and how it distinguishes from markets for other agricultural commodities is given. In this frame-work requirements of a valid equilibrium model of the world sugar market are discussed. In the third chapter various studies of the world sugar market based on equilibrium models are surveyed. In the chapter four the development of the approach of spatial equilibrium modeling finally the model applied in this dissertation are described The model covers 104 sugar pro-ducing and 90 sugar consuming regions. National agricultural and trade policies as well as numerous regional and preferential trade agreements are accounted for. In the second part of chapter four, four scenarios are simulated with the model. These are a reference scenario in which current policies are maintained, a WTO agreement, a unilateral liberalization of sugar policies on the part of the EU as well as a multilateral liberalization of the sugar markets of all countries. In the final chapter, some core results are summarized and further development of the applied approach especially possible solutions for the problem of quasi-normativity are dis-cussed.

O vírus de influenza aviária H5N1 tem se disseminado rapidamente por diversos países e continentes nos últimos anos, gerando grandes perdas econômicas e de vidas humanas. Existe a possibilidade de a doença chegar ao Brasil, o que provocaria elevado impacto sobre a economia, especialmente sobre o setor avícola. A ausência e a necessidade de estimativas de impacto econômico no país, derivadas de surtos de gripe aviária em território brasileiro, motivaram a presente pesquisa. Visando gerar tais estimativas e analisá-las, foram simulados três cenários utilizando-se de um modelo aplicado de equilíbrio geral inter-regional, denominado TERM-BR. O primeiro cenário (Cenário I) contempla um foco da doença no Rio Grande do Norte, região Nordeste do país. O segundo (Cenário II) simula a presença de diversos focos da doença no estado de São Paulo. O terceiro (Cenário III) considera o surgimento de diversos focos presentes nos estados Rio Grande do Norte, Rondônia, São Paulo e Rio Grande do Sul. Os resultados sinalizam impactos de maior dimensão na medida em que os focos da doença surgem próximos aos mercados produtores, exportadores e consumidores, como é o caso da região Sul e Sudeste. Na região Sul, em função da dimensão da avicultura na economia local, a crise do setor avícola acaba refletindo negativamente e acentuadamente sobre o conjunto da economia local. Nas regiões Norte e Nordeste, as restrições sobre a aquisição de aves vivas pelas famílias têm grande peso na retração da atividade econômica do setor avícola, já que a atividade de abate é pouco representativa e parcela importante das aves é adquirida diretamente pelas famílias, o que não acontece na mesma dimensão nas demais regiões do país. Observa-se também que o aumento do consumo de carne bovina e suína contribui para reduzir a crise na economia estadual nos estados produtores, e é também a fonte de crescimento para os estados em que a bovinocultura se destaca. O choque de demanda doméstica de produtos avícolas, comparado com os demais choques, revela-se como o principal responsável pelo comportamento na produção em quase todos os estados. Já a redução das exportações tem grande peso sobre o comportamento da produção avícola quando o foco da doença é na região exportadora ou próxima a ela. No estado de Santa Catarina, o choque de exportações prepondera sobre a queda do consumo doméstico quando do fechamento quase total dos mercados externos para carne de aves. Por último, o choque de oferta, via mortalidade das aves e destruição de ovos, pouco influencia a magnitude da queda na produção dos produtos da avicultura. / In the past few years, the bird flue virus H5N1 spread rapidly through various countries and continents, causing great economic and human losses. There is also the possibility of the disease arriving in Brazil, which would have a substantial impact on the country\'s economy, particularly on its poultry sector. The present study addresses the lack of estimates of the potential economic consequences of a bird flu outbreak on commercial poultry production in Brazil. The analysis consists of three simulations using a interregional general equilibrium model called TERM-BR. The first scenario focuses on an outbreak in the state of Rio Grande do Norte in the Northeastern part of the country. The second scenario simulates an outbreak at various places in the State of Sao Paulo, and the third scenario assesses the consequences of a bird flue outbreak in various states simultaneously, Rio Grande do Norte, Rondônia, São Paulo and Rio Grande do Sul. The results indicate greater economic impact when the outbreak occurs close to points of production and consumption, which is the case in the Southern and Southeastern regions of Brazil. In the South, where the poultry sector constitutes a larger share of the local economy, a potential avian flu outbreak will also have a greater negative economic impact. In the Northern and Northeastern region, live birds are generally purchased and slaughtered directly by individual families living in suburban and small town settings rather then by large scale processors and packinghouses. This characteristic explains why potential restrictions on these small purchases of live birds will have a very large negative economic impact on the poultry sector in the affected states. A possible reduction in poultry supply could however be offset by an increase in beef and pork consumption, thereby softening the economic affect of a bird flue outbreak by promoting growth of the beef and pork industry. In most states, this fall of domestic poultry demand is the primary cause for a shift in production. In contrast, the fall in export demand only weighs heavily on the local economy when the outbreak occurs close to exporting regions. In the state of Santa Catarina, for example, the effect of a fall in export demand dominates the effect of a fall in domestic demand, as export markets are almost completely shutdown. Finally, the reduction in poultry supply through death of infected birds and destruction of eggs, has little affect on the decrease of poultry production.

This study evaluates the land use changes and forests in Brazil, focusing on deforestation and its greenhouse gas emissions (GHG). More specifically, it analyses: (i) how the specialized literature integrates land-use changes to GHG emissions into a computable general equilibrium (CGE) framework; and (ii) the economic impacts of halting the deforestation. For this purpose, this study was divided into three independent essays. The first essay is theoretical, and evaluates the state of the art of the integration between land-use change and GHG emissions into CGE models. The second essay, is an empirical study about the economic impacts of zero deforestation in the Amazon Biome. The third essay, evaluates the implication of productivity gains in agriculture on land allocation, GHG emissions and the Brazilian economy. The results highlight the difficulties to integrate land use to its GHG emissions, as well as the effectiveness of the deforestation control in the Amazon to reduce national emissions, although it imposes losses to the economy and boosts regional inequalities. Finally, productivity gains in agriculture in turn, also may reduce the domestic emissions, but with no adverse impacts on the economy. However, such effects are limited, as they expire with the productivity gains. / Este trabalho analisa as mudanças do uso da terra e florestas no Brasil, com ênfase no desmatamento e nas emissões de gases de efeito estufa (GEE). Mais especificamente, avaliam-se: (i) como a literatura especializada realiza a integração entre as mudanças do uso da terra e emissões de GEE no arcabouço dos modelos de equilíbrio geral computável (EGC); (ii) os principais impactos em termos econômicos e de emissões, de políticas de redução do desmatamento. Para isso, esta tese foi dividida em três ensaios independentes. O primeiro ensaio, de caráter teórico, avalia as principais contribuições para a integração das mudanças do uso da terra às emissões de gases de efeito estufa em modelos EGC. O segundo ensaio, é um estudo empírico sobre os impactos econômicos do desmatamento zero no Bioma Amazônia. O terceiro ensaio, analisa as implicações de ganhos de produtividade na agropecuária sobre a alocação de terras, emissões de GEE e economia brasileira. Os principais resultados evidenciam as dificuldades para a integração das mudanças do uso da terra às emissões de GEE, bem como a efetividade do controle do desmatamento na Amazônia em reduzir as emissões nacionais, apesar de impor perdas à economia e intensificar as desigualdades regionais. Já os ganhos de produtividade na agropecuária, também reduziram as emissões domésticas, mas, sem impactar negativamente a economia. Porém, tais efeitos são limitados, uma vez que expiram com os ganhos de produtividade.

This dissertation consists of three chapters that aim to build a framework which can be used to study interactions between the labour market and macroeconomic dynamics. To achieve this, we reformulate a standard New Keynesian dynamic stochastic general equilibrium (DSGE) model to include search and matching frictions in the labour market and heterogeneity in price and wage stickiness. The first chapter, coauthored with Professor Engin Kara, builds a real business cycle model with labour search frictions and heterogeneity in wage stickiness. Shimer’s (2005) critique on labour search models, that it cannot explain observed unemployment movements, reignited a long-standing debate on unemployment fluctuations and wage determination. Gertler and Trigari (2009) introduce wage stickiness to the model to match unemployment volatility, while Pissarides (2009) finds this modification not satisfactory, citing evidence on high wage cyclicality. We find heterogeneity in wage stickiness in microdata on wages. Our model, which reflects this heterogeneity, matches the data better than its one sector alternatives. The second chapter, coauthored with Professor Engin Kara, studies output dynamics in New Keynesian models with the standard labour market and heterogeneity in price stickiness. We analytically and numerically show that these models can reproduce a hump-shaped output response to persistent monetary shocks, which is a key feature of monetary transmission mechanism. The version of models without heterogeneity cannot generate a hump. Flexible prices in models with heterogeneity play a crucial role, by generating inertia to price-setting and output. The third chapter studies how the labour search frictions affect output dynamics in New Keynesian models, when combined with heterogeneity in nominal rigidities. Long-term employment relationship, that arises under search and matching framework, makes marginal costs history dependent. We show that this history dependence generates inertia in the model. Heterogeneity in nominal rigidities significantly reinforces this inertia, resulting in a hump-shaped output response to persistent monetary shocks. The model without the search frictions cannot replicate a hump even when monetary shocks are persistent, when wages are sticky.