Al-Amin, Abul Quasem and Jaafar, Abdul Hamid and Siwar, Chamhuri (2008): A COMPUTABLE GENERAL EQUILIBRIUM APPROACH TO TRADE AND ENVIRONMENTAL MODELLING IN THE MALAYSIAN ECONOMY.
Download (184Kb) | Preview
Environmental pollution is now a serious problem in many developing countries. One approach to mitigate the problem is to implement various pollution control policies. However, due to a lack of adequate quantitative models, the economic impacts and effectiveness of many pollution control policies are still unknown. Therefore, there is a greater need to know whether economic liberalization, trade, environment and social welfare can be joined in one direction under environmental taxation and policies. Empirical studies for developed countries reveal that imposition of a carbon tax would decrease CO2 emissions significantly and might not dramatically reduce economic growth. To our knowledge there has not been any research done to simulate the economic impact of emission control policies in Malaysia. Studying the potential economic impact of emission control policies is very important because inappropriate policies that reduce carbon emission may at the same time reduce highly economic growth. It is thus important to find the correct pollution tax that could be imposed such that environmental pollution is reduced at the same time does not dampen economic growth. The method developed for this study is applied computable general equilibrium model (MYCGE) for imposing environmental taxation policies in the Malaysian economy. Three simulations were carried out using a Malaysian Social Accounting Matrix. The first simulation is related to the trade based and the last two are carbon based simulations. The model results indicate that further trade liberalization is not sensitive in the Malaysian economy. Particularly, the reasons could be attributed to the fact that Malaysian export duty is already low and Malaysian trade policy already highly liberalized. The carbon tax policy illustrates that a 1.21 percent reduction of carbon emission (via carbon tax) reduces the nominal GDP by 0.82 percent and exports by 2.08 percent; a 2.34 percent reduction of carbon emission reduces the nominal GDP by 1.90 percent and exports by 3.97 percent and a 3.40 percent reduction of carbon emission reduces the nominal GDP by 3.17 percent and exports by 5.707 percent.
|Item Type:||MPRA Paper|
|Original Title:||A COMPUTABLE GENERAL EQUILIBRIUM APPROACH TO TRADE AND ENVIRONMENTAL MODELLING IN THE MALAYSIAN ECONOMY|
|Keywords:||Trade, Air Emission, Environmental General Equilibrium, Malaysian Economy|
|Subjects:||C - Mathematical and Quantitative Methods > C6 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics
B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B22 - Macroeconomics
|Depositing User:||Quasem Al-Amin|
|Date Deposited:||16. May 2008 13:52|
|Last Modified:||13. Feb 2013 21:38|
Abdul Hamid, Al-Amin & Chamhuri Siwar. 2008. Environmental impact of alternative fuel mix in electricity generation in Malaysia. Renewable Energy, doi 10.1016/j.renene. 2007.12.014.
Al-Amin & Chamhuri Siwar. 2006. Globalization, Economic Growth, Poverty and Environmental Degradation in Third World Countries: A Review. Proceeding of the 3rd International GSN Conference, UKM, Malaysia, 21-23 August.
Al-Amin, Chamhuri Siwar, Abdul Hamid & Nurul Huda. 2008. GLOBALIZATION & ENVIRONMENTAL DEGRADATION: BANGLADESHI THINKING AS A DEVELOPING NATION BY 2015. IRBRP Journal. Vol. 3 No.1 (upcoming).
Al-Amin, Chamhuri Siwar, Abdul Hamid and Nurul Huda. 2007. GLOBALIZATION, ENVIRONMENT AND POLICY: MALAYSIA TOWARD A DEVELOPED NATION. (Proceeding of the 8th APSA conference, 19-21 November, Penang, Malaysia, 2007) SSRN Working Paper Series 1010565. New York, USA. Available on online: http://papers.ssrn.com Antweiler, Werner; Brian R. Copeland & M. Scott Taylor. 2001. Is Free Trade Good for the Environment?” American Economic Review. 91(4): 877–908.
Babiker, M. H., Maskus, K.E. & Rutherford, T.F. 1997. Carbon Taxes and the Global Trading System. Paper presented at the International Energy Workshop and Energy Modeling Forum Meeting, IIASA, June 23-25.
Beghin C. J., Roland-Holst, D. & Van der Mensbrugghe, D. 2005. Trade and the Environment in General Equilibrium: Evidence from Developing Economies. Beghin, John; Roland-Holst, David; Van der Mensbrugghe, Dominique (Eds.). Springer.
Bullard, Clark W. & Herendeen, Robert A. 1975. The energy cost of goods and services. Energy Policy. 3 (4): 268-278.
Brian R. Copeland & M. Scott Taylor 2003. Trade, Growth and the Environment, NBER Working Papers, 9823.
Dervis, K., de Melo, J. & Robinson, S. 1982. General Equilibrium Models for Development Policy. Cambridge: Cambridge University Press.
DOE. 2001. Environmental Quality Report 2000.Ministry of Science technology and the environment. Putrajaya, Malaysia.
DOS. 1999. Economic Report, Various Issues. Ministry of Finance, Department of Statistics, Malaysia.
Ferraz & Young. 1999. Trade liberalization and industrial pollution in Brazil. United nations Publications, Santiago Chile.
Han, Xiaoli and Lakshmanan, T.K. 1994. Structural Changes and Energy Consumption in the Japanese Economy 1975-85: An Input-Output Analysis. Energy Journal. 15(3): 165-188.
Herendeen, Robert A. 1978. Energy Balance of Trade in Norway, 1973. Energy Systems and Policy. 2(4): 425-432.
Herendeen, Robert A. & Bullard, Clark W. 1976. US Energy Balance of Trade, 1963-1967. Energy Systems and Policy. 1(4): 383-390.
Kakali Mukhopadhyay & Debesh Chakraborty. 2005. Is liberalization of trade good for the Environment?-Evidence from India. Asia-Pacific Development Journal. 12(1): 109-136.
Lenzen, Manfred. 1998. Primary energy and greenhouse gases embodied in Australian final consumption: an input-output analysis. Energy Policy. 26(6): 495-506.
Li, Jennifer C. 2005. Is There a Trade-Off between Trade Liberalization and Environmental Quality? A CGE Assessment on Thailand. Journal of Environment and Development. 14(2): 252-77.
Machado, G., R. Schaeffer & E. Worrell. 2001. Energy and carbon embodied in the international trade of Brazil: an input-output approach. Ecological Economics. 39(3): 409-424.
Matthew A. Cole & Robert J. R. Elliott. 2005. FDI and the Capital Intensity of ‘Dirty’ Sectors: A Missing Piece of the Pollution haven Puzzle. Review of Development Economics. 9(4): 530-548.
Matthew A. Cole & Robert J.R. Elliott. 2003. Determining the trade–environment composition effect: the role of capital, labor and environmental regulations. Journal of Environmental Economics and Management. 46:363–383.
MDP. 2006. Ninth Malaysia Plan, 2006-2010. Economic Planning Unit, Prime Minister’s Department, Putrajaya, Malaysia.
MDP. 2003. Eighth Malaysia Plan. Economic Planning Unit, Prime Minister’s Department, Putrajaya, Malaysia.
Munksgaard, J. & K.A. Pedersen. 2001. CO2 Accounts for Open Economies: Producer or Consumer Responsibility? Energy Policy. 29(4): 327-335.
Levinson, Arik & M. Scot Taylor. 2004. Trade and Environment: Unmasking the pollution Haven Effect. NBER working paper no. W10629.
Perroni, C. & Wigle, R. M.1994. International trade and environmental quality: how important the linkages? Canadian Journal of Economics. 27 (3): 551–567.
Robinson, S., Yunez-Naude, A., Hinojosa-Ojeda, R., Lewis.D. J. & Devarjan, S. 1999. From Stylized to applied models: Building multisector CGE models for policy analysis. North American Journal of Economics and Finance. 10: 5-38.
Stephenson, J. & Saha, G.P. 1980. Energy balance of trade in New Zealand. Energy Systems and Policy. 4(4): 317-326.
Strout, Alan M. 1985. Energy-intensive materials and the developing countries. Materials and Society. 9(3): 281-330.
Wier, Mette. 1998. Sources of changes in emissions from energy: a structural decomposition analysis. Economic Systems Research. 10(2): 99-112.
Wright, David J. 1974. Goods and services: an input-output analysis. Energy Policy. 2(4): 307-315.
Xing, Y. & C. Kolstad. 2000. ‘Do Lax Environmental Regulations Attract Foreign Investment.?’ Working paper No. 28-29. University of California Santa Barbara.
Wyckoff, Andrew W. & Roop, Joseph M. 1994. The embodiment of carbon in imports of manufactured products: implications for international agreements on greenhouse gas emissions. Energy Policy. 22(3): 187-194.