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.

Thesis (M.Com. (Economics))--North-West University, Potchefstroom Campus, 2008.

Thesis (M.Com. (Economics))--North-West University, Potchefstroom Campus, 2008.

Thesis (M.Com. (Economics))--North-West University, Potchefstroom Campus, 2008.

We introduce the tractable buffer stock savings setup of Carroll (2009 NBER Working Paper) into an otherwise conventional New-Keynesian dynamic stochastic general equilibrium model with financial frictions. The introduction of a precautionary saving motive arising from an uninsurable risk of permanent income loss, affects the model's properties in a number of interesting ways: it produces a more hump-shaped reaction of consumption in response to both supply (technology) and demand (monetary) shocks, and more pronounced reactions in response to demand shocks. Adoption of the buffer stock savings setup thus offers a more microfounded way, compared to, e.g., habit preferences in consumption, to introduce Keynesian features into the model, serving as a device to curbing excessive consumption smoothing, and to attributing a higher role to demand driven fluctuations. We also discuss steady state effects, determinacy properties as well as other practical issues. (authors' abstract) / Series: Department of Economics Working Paper Series

O debate sobre a desindustrialização brasileira é bastante denso e ainda inconclusivo, embora haja algum consenso entre as diferentes vertentes econômicas de que o setor manufatureiro tem passado por dificuldades, principalmente após a crise financeira de 2008. Tendo este cenário em vista, o governo atuou na tentativa de restaurar a atividade industrial com algumas medidas de estímulo ao setor e através de políticas macroeconômicas (câmbio e juros). Nesse contexto, o presente trabalho investiga os impactos econômicos dessas políticas - redução da taxa de juros, desoneração da folha de pagamentos, redução do IPI, restrição ao fluxo de capitais estrangeiros (elevação do IOF) e redução da tarifa de energia elétrica - sobre a produção, o bem-estar, o consumo, entre outras variáveis macroeconômicas e setoriais. Além disso, busca-se analisar outras duas medidas alternativas - subsídio ao setor de transportes e reforma tributária, comparando seus resultados com aqueles obtidos pela avaliação das medidas já adotadas pelo governo. Para tanto, utiliza-se um modelo de Equilíbrio Geral Computável (EGC) calibrado para o ano de 2009, com o intuito de estudar cenários de adoção dessas políticas e contribuir para a literatura econômica de forma mais objetiva. Os resultados obtidos pela modelagem indicam que é possível afirmar que muitas das medidas implementadas mostram-se adequadas para o contexto da economia brasileira no pós-crise, seja pelos benefícios setoriais associados a um maior nível tecnológico da produção quanto pelos resultados macroeconômicos de reanimar a atividade econômica. As medidas de redução na taxa de juros (Selic e TJLP) e reforma tributária neutra que considera a substituição dos impostos intermediários pelo VAT são capazes de elevar o PIB e o bem-estar e ainda melhorar a composição setorial da produção e exportação, sem que a atividade do governo seja negativamente afetada. Outras medidas, como a desoneração da folha de pagamentos, reforma tributária com redução da receita fiscal, e a redução no IPI também trazem bons resultados, mas não se sustentam no longo prazo se não houver mudança na eficiência dos gastos públicos, uma vez que todas geram queda na atividade do governo. No sentido contrário, as medidas de subsídio ao setor de transporte, de redução da tarifa de energia elétrica e redução do fluxo de capitais externos, que implicam na atuação do governo sobre o livre funcionamento do mercado, geraram resultados indesejados no que diz respeito a um menor estímulo a indústrias de maior conteúdo tecnológico, além de não reverterem a perda de participação da indústria no emprego e no PIB. / Brazilian deindustrialization debate is quite dense and still inconclusive, although there is some consensus on the manufacturing struggle among different economic approaches, especially after the 2008 financial crisis. Considering this scenario, the government has been acting in an attempt to restore industrial activity by granting stimuli focused on the manufacturing sector and curbing currency appreciation. In this context, this study aims to investigate the economic impacts of these policies on GDP, welfare, consumption and macroeconomic and sectorial variables. Furthermore, alternative policies were considered, in order to compare the results with those obtained through the evaluation of effective government policies. Therefore, we apply a Computable General Equilibrium (CGE) model, updated for 2009, in order to study the effects of adopting these polices and contribute to the economic literature concerning this subject. The results indicate that it is possible to affirm that most measures are appropriate to help Brazilian economy after the crisis, both by sector benefits associated with a higher technological level of production and by improving macroeconomic outcomes. Measures to reduce interest rate (Selic and TJLP) and neutral tax reform that considers the replacement of intermediaries tax by VAT are able to raise GDP and welfare and to further improve the sectoral composition of production and export, without adversely affecting government activity. Other measures, such as payroll exemptions, tax reform with reduction of the fiscal income, and IPI reduction also bring good results, but would hardly be maintained in long term if there is no change in public spending efficiency, since all have negative impacts on government activity. On the contrary, subsidies to the transport sector, cuts in electricity rates and restriction to foreign capital inflow, which reflect government action on free market functioning, led to undesirable results in the context of raising technological level of the Brazilian production and reverse industry participation loss in employment and GDP.

LVT (Land Value Tax), unlike other taxes, causes no distortions in economic decision-making and therefore does not compromise the efficiency of a market economy. While there have been various challenges to this conclusion, it seems that the neutrality of LVT has been proven in the literature. Although it has been established conceptually that LVT is non-distortive, it is important to empirically test the effects of LVT reform in diverse aspects. Unlike other studies, this dissertation examines the economic, spatial, and welfare effects of LVT reform in a second-best situation employing an urban (and spatial) CGE (Computable General Equilibrium) model. In addition, it examines the distributional effects among different income groups and the short-term aspects of LVT as well. The feature that the present dissertation incorporates as the second-best situation includes LLZ (Large Lot Zoning). The computation and the assumptions about parameters for the current CGE model are made based on demographic, physical, and economic features of the Atlanta urban area in Georgia. The results suggest the following: (1) LVT reform is economically feasible, (2) the tax on land rent stabilizes prices and contracts the CBD (Central Business District) and urban boundary in the economy where the CBD and urban area are endogenously determined, while the tax on land rent is purely neutral in the economy where the CBD and urban area are fixed, (3) LVT reform increases the money-metric welfare of residents by about 20% of the tax revenue in the economy where residents are landowners, while LVT reform increases the money-metric welfare of residents by about 45% of the tax revenue in the economy where the lands are owned by absentee, (4) LVT reform more increases the money-metric welfare of the less-income groups that own the smaller land area, which is contrary to the case of LLZ, (5) LLZ and property tax can cause the sprawl of an urban area, but at a very low elasticity of substitution between land and the other factors (0.1), even switching from the land tax to the property tax (or graded property tax) can contract the urban area, (6) LLZ, in the long-term during which housing capital and urban boundary are not fixed and in the economy where residents are landowners, can improve the welfare of households, while LLZ worsens the welfare of households both in the economy where the lands are owned by absentee and in the short-term during which housing capital is immobile in any economy, (7) When we consider that housing capital is immobile, the increase in the money-metric welfare due to LVT reform becomes weak, compared to the case with perfectly mobile housing capital.

In this dissertation, two questions concerning monetary policy under the Taylor rule have been addressed. The first question is on, under the Taylor rule, whether a central bank should be responsible for both bank supervision and monetary policy or whether the two tasks should be exercised by separate institutions. This is the main focus of Chapter I. The second question is on whether the Taylor rule plays an important role in explaining modern business cycles in the United States. The second question has been covered by Chapter II. The implications of the first chapter can be summarized as follows: (i) it is inevitable for the central bank to have a systematic error in conducting monetary policy when the central bank does not have a bank supervisory role; (ii) without a bank supervisory role, the effectiveness of monetary policy cannot be guaranteed; (iii) because of the existence of conflict of interests, giving a bank supervisory role to the central bank does not guarantee the effectiveness of monetary policy, either; (iv) the way of setting up another government agency, bank regulator, and making the central bank and the regulator cooperate each other does not guarantee the effectiveness of monetary policy because, in this way, the systematic error in conducting monetary policy cannot be eliminated; (v) in the view of social welfare, not in the view of the effectiveness of monetary policy, it is better for the central bank to keep the whole responsibility or at least a partial responsibility on bank supervision. In the second chapter, we examined the effect of a technology shock and a money shock in the context of an RBC model incorporating the Taylor rule as the Fed??s monetary policy. One thing significantly different from other researches on this topic is the way the Taylor rule is introduced in the model. In this chapter, the Taylor rule is introduced by considering the relationship among the Fisher equation, Euler equation and the Taylor rule explicitly in the dynamic system of the relevant RBC model. With this approach, it has been shown that, even in a flexible-price environment, the two major failures in RBC models with money can be resolved. Under the Taylor rule, the correlation between output and inflation appears to be positive and the response of our model economy to a shock is persistent. Furthermore, the possibility of an existing liquidity effect is found. These results imply that the Taylor rule does play a key role in explaining business cycles in the United States.

This paper studies the cost effectiveness of climate policy if there are technology externalities. For this purpose, we develop a forward-looking CGE model that captures empirical links between CO2 emissions associated with energy use, directed technical change and the economy. We find the cost-effective climate policy to include a combination of R&D subsidies and CO2 emission constraints, although R&D subsidies raise the shadow value of the CO2 constraint (i.e. CO2 price) because of a strong rebound effect from stimulating innovation. Furthermore, we find that CO2 constraints differentiated toward CO2-intensive sectors are more cost effective than constraints that generate uniform CO2 prices among sectors. Differentiated CO2 prices, through technical change and concomitant technology externalities, encourage growth in the non-CO2 intensive sectors and discourage growth in CO2-intensive sectors. Thus, it is cost effective to let the latter bear relatively more of the abatement burden. This result is robust to whether emission constraints, R&D subsidies or combinations of both are used to reduce CO2 emissions. / 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/).

The thesis sheds light on key policy issues emerging from the recent Global Financial Crisis. The first chapter studies whether expansionary monetary policy contributes to bank risk-taking, in the case of Asia. I rely on panel data analysis covering 432 banks in 9 Asian countries over the year 2000-2011. The ratio of risky assets to total assets serves as a risk-taking indicator. The results support the existence of the bank risk-taking channel, which is more pronounced for banks listed on the stock market. I also report new findings with respect to how banks take more risk following monetary expansion. Importantly, evidence of excessive leverage is not found. The second chapter constructs a model for analyzing bank risk-taking. I embed firm heterogeneity, endogenous default risk and capital adequacy regulation into both RBC and NK DSGE models. A subset of the firms can partially default on their loans obligation but subject to non-pecuniary default penalty. With those financial frictions in place, I find that standard macroeconomic shocks can induce banks to engage in higher risk-taking. The chapter then explores the effectiveness of several macro-prudential tools in mitigating risk-taking. I find countercyclical capital buffers and risky to total asset ratio targeting to be effective. The third chapter emphasises the spillover effects of shocks originating in the housing and financial market on the real economy. I embed endogenous mortgage default into a New Keynesian model that features housing and the banking sector. The latter faces capital regulation. We study two key shocks, namely shocks to the variance of idiosyncratic housing shock and shocks to the penalty on capital regulation. Both are instrumental in causing a surge in mortgage default and loans risk premium, which constrains bank lending activity. The chapter later introduces three macroprudential measures to explore whether they improve economic stability and welfare.