Modeling a Small Open Economy Considering the Structure of Electricity Market Based on the Dynamic Stochastic General Equilibrium Model

Khaleghifar, Najmeh; Khodavaisi, Hassan

doi:10.22054/jiee.2019.12298

Document Type : Research Paper

Authors

¹ Ph.D. Candidate in International Economics, Faculty of Economics and Management, Urima University

² Department of Economics Urmia University

https://doi.org/10.22054/jiee.2019.12298

Abstract

Electricity is one of the essential factors for the economic development in almost all countries. On the other hand, the increasing use of the non-renewable energy, like fossil fuels for electricity generation, would lead to the depletion of the non-renewable reserves. Also, the use of fossil fuels is one of the most important factors contributing to environmental pollution and climate change. Hence, the optimal use of energy in the process of the economic development has always been considered as an important objective for the sustainable development. In this research, a small open economy has been devised by considering a structure for its electric power market based on the Dynamic Stochastic General Equilibrium model, taking into account four main sectors, including households, production, government and the foreign trade sector. Furthermore, the dynamic effects of shocks in the economy on macroeconomic variables have been examined in the study. The simulation and analysis of impulse response functions of the model indicated that the productivity shocks in the electricity industry have significant effects on macroeconomic variables. The adjustment of the effects of shocks takes place in the long run. Moreover, the mechanism of the effect of a consumer’s preferences shock is quite different, and even its adjustment on some macroeconomic variables occurs over a longer period of time compared to the other shocks

Keywords

References

اصغری اسکوئی، محمدرضا و فلاحی، فرهاد و دوستی‌زاده، میثم و مشیری، سعید (1397)، «کاربرد یادگیری تقویتی در یک مدل‌سازی عامل‌محور برای بازار عمده‌فروشی برق ایران»، پژوهشنامه اقتصاد انرژی ایران، شماره 25، صفحات 40-1.

رهبر، فرهاد و حیدری، کیومرث و قهرمانی، هادی (1397)، «تعیین قیمت بهینه برق: مطالعه موردی شرکت توانیر»، پژوهشنامه اقتصاد انرژی ایران، شماره 24، صفحات 88-57.

سالم، علی‌اصغر و اکابری‌تفتی، مهدی (1396)، «برآورد اثر بازگشتی مستقیم بهبود کارایی مصرف برق در بخش خانگی مناطق شهری ایران»، پژوهشنامه اقتصاد انرژی ایران، شماره 22، صفحات 74-45.

صادقی، زین‌العابدین و بهادرمایوان، سحر و نجاتی، مهدی (1397)، «شبیه‌سازی یکپارچگی بازار برق (سیستم‌های قدرت) در کشورهای هم‌مرز ایران»، پژوهشنامه اقتصاد انرژی ایران، شماره 24، صفحات 149-123.

فرازمند، حسن و آرمن، سید عزیز و افقه، سید مرتضی و قربان‌نژاد، مجتبی (1395)، «اصلاح قیمت انرژی و سیاست پولی: رویکرد تعادل عمومی تصادفی پویا (DSGE)، فصلنامه اقتصاد مقداری (بررسی‌های اقتصادی سابق)»، شماره2، صفحات69-41.

مجدزاده طباطبائی، شراره و هادیان، ابراهیم (1397)، «بررسی اثرات اقتصادی، رفاهی و زیست‌محیطی سیاست قیمت‌گذاری تعرفه‌ای به منظور توسعه انرژی‌های تجدیدپذیر در ایران: کاربرد الگوی تعادل عمومی پویای محاسبه‌پذیر با رهیافت تلفیقی»، پژوهشنامه اقتصاد انرژی ایران، شماره 24، صفحات 186-151.

مهینی‌زاده، منصور و فیض‌پور، محمدعلی و عابدی، مریم (1396)، «تجزیه و تحلیل کارایی نهاده برق در صنایع تولیدی ایران با تأکید بر هدفمندسازی یارانه‌ها»، پژوهشنامه اقتصاد انرژی ایران، شماره 22، صفحات 203-165.

Argentiero, A. and Bollino, CA. and Micheli, S. and Zopounidis, C. (2018), “Renewable energy sources policies in a Bayesian DSGE model”, Renewable Energy, no.120, pp.60-68.

Bartleet, M. and Gounder, R. )2010(, “Energy Consumption and Economic Growth in New Zealand: Results of Trivariate and Multivariate Models”, Energy Policy , no.38, pp. 3508-3517.

Bernanke, B.S. and Gertler, M. and Watson, M. )1997(, “Systematic Monetary Policy and the Effects of Oil Price Shock”, Brookings Papers on Economic Activity, no. 1, pp. 91-157.

Cooley, T.F. and Prescott, E.C. )1995(, “Economic Growth and Business Cycle”, In Frontier of Business Cycle Research, Princeton, NJ.

Dagher, L. and Yacoubian, T. )2012(, “The Causal Relationship between Energy Consumption and Economic Growth in Lebanon”, Energy Policy,no. 50, pp. 795-801.

De Miguel, C. and Manzano, B. and Martín-Moreno, J.M. )2003(, “Oil Price Shocks and Aggregate Fluctuations”, the Energy Journal, no. 24(2), pp. 47-61.

De Miguel, C. and Manzano, B. and Martín-Moreno, J.M. )2005(, “Oil Shocks and the Business Cycle in Europe”, The Energy Journal, no.24(2), pp.47-62

Dhawan, R. and Jeske, K. )2007(, “Energy Price Shocks and the Macroeconomy: The Role of Consumer Durables”, Mimeo, Federal Reserve Bank of Atlanta.

Ellis, J. )2010(, “The Effects of Fossil Fuel Subsidy Reform: A Review of Modelling and Empirical Studies”, Geneva: Global Subsidies Initiative of the International Institute for Sustainable Development, Available at: (http://www.iisd.org/gsi/sites/default/files/effects_ffs.pdf)

Finn, M.G. )2000(, “Perfect Competition and the Effects of Energy Price Increases on Economic Activity,” Journal of Money, Credit and Banking,vol.32, no.3, pp.400-416

Fischer, C. and Heutel, G. )2013(, “Environmental Macroeconomics: Environmental Policy, Business Cycles, and Directed Technical Change” Annual Review of Resource Economics,no. 5 (1), pp.197–210.

Hamilton, J.D. )1996(, “This Is What Happened to the Oil Price-Macroeconomy Relationship,” Journal of Monetary Economics,no. 38,pp.215-220.

Hamilton, J.D. )2003a), “What Is an Oil Shock?”, Journal of Econometrics, no.113, pp. 363-398.

Hamilton, J.D. )2009(, “Causes and Consequences of the Oil Shock of 2007-08”, Brookings Papers on Economic Activity,no. 2009(1), pp. 215-261.

Jang, T.S. and Okano, E. )2013(, “Productivity Shocks and Monetary Policy in a Two-Country Model”, Dynare Working Papers 29, CEPREMAP.

Karanfil, F. and Li, Y. )2015(, “Electricity Consumption and Economic Growth: Exploring Panel-Specific Differences”, Energy Policy, no. 82, pp. 264-277.

Kilian, L. )2008(, “The Economic Effects of Energy Price Shocks”, CEPR Discussion Paper, No. DP6559.

Kim, I. M. and Loungani, P. )1992(, “The Role of Energy in Real Business Cycles”, Journal of Monetary Economics, no.29, pp. 173-189.

Niu, T. et al.(2018), “Environmental Tax Shocks and carbon emission: An estimated DSGE model”. Structure Change Economic Dynomic, vol.47, pp.9-17

Payne, J.E. )2010(, “A Survey of the Electricity Consumption-Growth Literature”, Applied Energy, no. 87, pp. 723-731.

Rotemberg, J.J. and Woodford, M. )1996(, “Imperfect Competition and the Effects of Energy Price Increases on Economic Activity”, Journal of Money, Credit and Banking, no.28, pp. 549-577.

Tan, B.H. )2012(, “RBC Model with Endogenous Energy Production”, School of Economics, Singapore Management University.

Tobin, J., )1980( “Stabilization Policy Ten Years After”, Brookings Papers on Economic Activity, no. 1, pp. 19-71.

Tsani, S.Z. )2010(, “Energy Consumption and Economic Growth: A Causality Analysis for Greece”, Energy Economics,no. 32, pp. 582-590.

Tumen, S. et al., “Taxing fossil fuels under speculative storage”, Energy Economics,no.53, pp.64-75

Wickens, M. )2008(, “Macroeconomic Theory: A Dynamic General Equilibrium Approach”, Princeton University Press.2end edition.

Wijnbergen, S.V. and Martin, R. (1988), “Efficient Pricing of Natural Gas: A Case Study of Egypt”, Journal of Public Economics,no. 36, pp. 177-196.

Iranian Energy Economics

Modeling a Small Open Economy Considering the Structure of Electricity Market Based on the Dynamic Stochastic General Equilibrium Model

References

References

Volume 8, Issue 31 - Serial Number 3
July 2019
Pages 31-74

Modeling a Small Open Economy Considering the Structure of Electricity Market Based on the Dynamic Stochastic General Equilibrium Model

References

References

Volume 8, Issue 31 - Serial Number 3July 2019Pages 31-74

Volume 8, Issue 31 - Serial Number 3
July 2019
Pages 31-74