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Thesis suggested topics
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Applied general equilibrium (AGE/CGE) modelling for fiscal policy analysis. The development of this type of models has been advanced considerably and they have been used by a variety of institutions such as international organisations (The World Bank, OECD, IMF) and government institutions (Treasury Department of the USA, European Commission, Danish Ministry of Trade and Industry) to assess their policy options in the economic policy process. Government authorities regularly commission modellers to provide analysis of current policy issues. Public discussion of policy issues in the newspapers often focuses on the modeller’s results. The advantages of AGE models can be summarised as follows: a. they are useful each times there is no clear answer coming from theory. That happens, for example, when different forces operate in a countervailing way ( i.e. income and substitution effect in labour supply); b. they allow to specify detailed and complex scenarios that were not possible in a theoretical framework; c. they allow to quantify the effects of the policy changes; d. they complete analysis undertaken with econometric models. They should not be considered as alternative but more as complementary to econometric models. The main difference being that AGE models allow for a better and more complete specification of the behaviour of all the economic agents working in the economy. Specific issues that it is worth investigating in this field may concern, among others: 1. Evaluation of policy simulations in a general equilibrium framework with regional and multi-regional models based on social accounting matrices (SAMs). The specific interest in the Italian scenario is the evaluation of regional effects of fiscal and economic policies, alternatively run to a regional, national and supranational level. Specific policies are those whose effects are not only confined to the regional boundaries but also affect, to a certain extent, the other regions and the rest of the economy, such as: A. the regional policies connected with competences’ devolution to local governments and with the subsequent increase in regional autonomy; B. the social and development policies at regional level; C. the policies run at upper government levels in order to harmonize the instruments and the objectives with the European level. linking a microsimulation model to an AGE/CGE model. Combining these two instruments enhances the possibility of analysing microeconomic effects (such as poverty and inequality) of a macroeconomic policy (such as trade-liberalisation and fiscal reform). The issue arises as many existing microsimulation tax models do not explicitly incorporate behavioural responses of households or individuals to changes in the tax and social security system. On their side, applied general equilibrium models usually include a small number of hypothetical household types or aggregate household groups (sometimes a single representative consumer) so that the distributional analysis cannot be detailed enough and it might even be misleading to some extent.
Beside the above mentioned themes, frontiers in this field have widened in many directions: imperfect competition in order to show the impact on welfare through a reduced monopoly power and economies of scale; endogenous technological change for the analysis of growth effects issues; new applications to finance; representative versus real households in the macroeconomic modelling of inequality; general equilibrium modelling for global climate change; simulation and estimation of hedonic models and many others. All these themes can be evaluated for the thesis purposes.
References for the suggested topics Kehoe T.J., Srinivasan T.N., Whalley J., eds., (2005), Frontiers in Applied General Equilibrium Modeling: In Honor of Herbert Scarf, Cambridge University Press, xi, 436, Cambridge and New York. Cardenete M.A., Sancho F., (2003), “An applied general equilibrium model to assess the impact of national tax changes on a regional economy, Review of urban and regional development Studies”, 15(1): 55-65. Fossati, A., Targetti R. (a cura di), Matrici regionali di contabilità sociale & analisi di politiche economiche: il caso della Liguria, Toscana e Marche, F. Angeli, Milano, 2004. Lattarulo P., R. Paniccia’, N. Sciclone (2003), “Un approccio integrato micro e macro all’analisi dei redditi delle famiglie toscane”, Irpet, Interventi note e rassegne, 21/2003. M. Plumb (2001), “An integrated microsimulation and applied general equilibrium approach to modelling fiscal reform”, http://www.econometricsociety.org/meetings/am01/content/presented/papers/plumb.pdf
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Pubblications
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CAVALLETTI B. (2002). Ageing Population and Pension reform in Italy. In: FOSSATI A. WIEGARD W. EDS. Policy evaluation with computable general equilibrium models. con Lubcke E. LONDON: Routledge.
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