Table D3.
Closures and shocks by causal factor
| Causal Factors | CGE Model Shocks | Closure swap (if required) | Approach |
|---|---|---|---|
| Mandatory Closures | Production (qo(“selected sectors”,REG)) | Production tax (to(“selected sectors”,REG)) | “Phantom tax” approach used to raise prices and lower production through a reduction in demand |
| Reduction in share of private consumption and rise in savings rate (dppriv(REG)) | n.a. | ||
| Decline in the workforce due to deaths and illness | Supply of labor (qedusup(REG)) | n.a. | |
| pop(REG) | n.a. | ||
| qp_agg(“essentials”,REG) | dpp_agg(“essentials”,REG) | This closure swap appears in all simulations to fix consumption of essentials | |
| Avoidance | Reductions in the effective supply of labor (qedusup(REG)) | n.a. | |
| Reductions in private demand (qp(“selected sectors”,REG)) | dpp_stop(“selected sectors”,REG) | Distribution parameters approach | |
| Reductions in government demand for health (qg(” hht”,REG)) | dpg_stop(“hht”,REG) | Distribution parameters approach | |
| Reduction in share of private consumption and rise in savings (dppriv(REG)) | n.a. | ||
| Increased demand for health care | Increased private demand for health care (qp(“hht”,REG)) | dpp_stop(“hht”,REG) | Distribution parameters approach |
| Increased government demand for health care (qg(“hht “,REG)) | dpg_stop(“hht”,REG) | Distribution parameters approach | |
| Rise in share of private consumption and rise in savings (dppriv(REG)) | n.a. | ||
| Rise in government spending (yg(REG)) | dpgov(REG) | This closure swap appears in all simulations to stop government spending from falling with income. | |
| Pent-up demand | Increased demand for specific commodities and services (qp(“selected sectors”,REG)) | dpp_stop(“selected sectors”,REG) | Distribution parameters approach |
| Rise in share of private consumption and rise in savings (dppriv(REG)) | n.a. | ||
| Fiscal policy | Unemployment and other direct payments to households (dppriv(REG)) | n.a. | |
| Rise in total government spending (yg(REG)) | dpgov(REG) | This closure swap appears in all simulations to stop government spending from falling with income. | |
| Rise in government spending for the public sector (vg(“ogs”, REG))a | dpg_stop(“ogs”, REG) | Distribution parameters approach | |
| Rise in government spending of other specific commodities (education and health) (vg(“selected commodities”, REG)) | dpg_stop(“selected commodities”, REG) | Distribution parameters approach | |
| Rise in public sector spending of specific commodities (vf(“selected commodities”, “osg”,REG))b | dpf_stop(“selected commodities”, “osg”,REG) | Distribution parameters approach | |
| Rise in health spending on pharmaceuticals (vf(“bph”, “hht”,REG)) | dpf_stop(“bph”, “hht”,REG) | Distribution parameters approach | |
| Rise in spending on commodities for investment purposes (vf(“selected commodities”, “cgds”,REG))c | dpf_stop(“selected commodities”, “cgds”,REG)) | Distribution parameters approach | |
| Subsidies to firms for workers and owners tfe(ENDW,“selected sectors”,REG) | n.a. | ||
| Corporate taxes tfe(“Capital”,“selected sectors”,REG)d | n.a. |
Variables labeled with a preceding “v” represent the sum of changes in the quantity and price relative to the numeraire. For instance, vg(i,r) is the percent change in the value of government purchases relative to the model numeraire: vg(i,r) = qg(i,r) + pg(i,r) - ptradewld. Note adding ptradewld to this equation does nothing, it is added for those who might be concerned about homogeneity when shocking so called ‘values’.
GTAP sectors cns, ele, ofi, otp and cmn.
GTAP sectors cmn and ele.
While tfe is not the most appropriate tax to use for corporate taxes, there is no explicit corporate tax rate in the GTAP model and the other alternative, to (production tax), was being used for mandatory closures, making tfe the simpler option.