Climate-resilient Economic Development in Vietnam: Insights from a Dynamic General Equilibrium Analysis (DGE-CRED)
Andrej Drygalla, Katja Heinisch, Christoph Schult
IWH Technical Reports,
No. 1,
2024
Abstract
In a multi-sector and multi-region framework, this paper employs a dynamic general equilibrium model to analyze climate-resilient economic development (DGE-CRED) in Vietnam. We calibrate sector and region-specific damage functions and quantify climate variable impacts on productivity and capital formation for various shared socioeconomic pathways (SSPs 119, 245, and 585). Our results based on simulations and cost-benefit analyses reveal a projected 5 percent reduction in annual GDP by 2050 in the SSP 245 scenario. Adaptation measures for the dyke system are crucial to mitigate the consumption gap, but they alone cannot sufficiently address it. Climate-induced damages to agriculture and labor productivity are the primary drivers of consumption reductions, underscoring the need for focused adaptation measures in the agricultural sector and strategies to reduce labor intensity as vital policy considerations for Vietnam’s response to climate change.
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Kosten der Maßnahmen aus dem Rentenpaket II vom März 2024 und Finanzierungsoptionen
Oliver Holtemöller, Christoph Schult, Götz Zeddies
IWH Studies,
No. 2,
2024
Abstract
Im Zuge des demografischen Wandels nehmen die Ausgaben der gesetzlichen Rentenversicherung in Deutschland in Zukunft deutlich zu, während die Lohnsumme, aus der die Beiträge zu finanzieren sind, gedämpft wird. Immer weniger Beitragszahler stehen in dem umlagefinanzierten System immer mehr Rentnern gegenüber. Bisher hat der Nachhaltigkeitsfaktor in der Rentenformel dafür gesorgt, dass sowohl Beitragszahler als auch Rentenempfänger durch den demografischen Wandel belastet werden. Das von der Bundesregierung vorgeschlagene Rentenpaket II hebt die Wirkung des Nachhaltigkeitsfaktors durch eine Haltelinie für das Rentenniveau faktisch auf. Dies führt zu erheblichen Mehrausgaben der gesetzlichen Rentenversicherung gegenüber dem bisherigen Rechtsrahmen. Dadurch wird der ohnehin auf deutlich über 20% steigende Beitragssatz nochmal um etwa einen Prozentpunkt stärker zunehmen. Das mit den Rentenpaket II geplante Generationenkapital kann aufgrund seines geringen Volumens den Anstieg des Beitragssatzes nur um etwa 0,2 Prozentpunkte abfedern, und das auch nur, wenn sich die Erwartungen an die Rendite nach Kosten erfüllen. Eine Beibehaltung des Nachhaltigkeitsfaktors und eine Stärkung individueller Vorsorge inklusive individueller Kapitalansprüche wäre eine gute Alternative zum Rentenpaket II.
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Department Profiles
Research Profiles of the IWH Departments All doctoral students are allocated to one of the four research departments (Financial Markets – Laws, Regulations and Factor Markets –…
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Evaluation of the InvKG and the federal STARK programme
Evaluation of the InvKG and the federal STARK programme InvKG = Coal Regions Investment Act STARK = Strengthening the Transformation Dynamics and Awakening in the Coalfields and…
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Loose (Interview)
When there were almost no flats in Halle yet ... Brigitte Loose about IWH's foundation and development Ms Loose, how did you experience the early days of IWH? Looking back, it was…
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Research Clusters
Three Research Clusters Research Cluster "Economic Dynamics and Stability" Research Questions This cluster focuses on empirical analyses of macroeconomic dynamics and stability.…
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Department Profiles
Research Profiles of the IWH Departments All doctoral students are allocated to one of the four research departments (Financial Markets – Laws, Regulations and Factor Markets –…
See page
Evidence-based Support for Adaptation Policies in Emerging Economies
Maximilian Banning, Anett Großmann, Katja Heinisch, Frank Hohmann, Christian Lutz, Christoph Schult
Low Carbon Economy,
No. 1,
2023
Abstract
Climate change is increasingly evident, and the design of effective climate adaptation policies is important for regional and sectoral economic growth. We propose different modelling approaches to quantify the socio-economic impacts of climate change on three vulnerable countries (Kazakhstan, Georgia, and Vietnam) and design specific adaptations. We use a Dynamic General Equilibrium (DGE) model for Vietnam and an economy-energy-emission (E3) model for the other two countries. Our simulations until 2050 show that selected adaptation measures, in particular in the agricultural sector, have positive implications for GDP. However, some adaptation measures can even increase greenhouse gas emissions. Focusing on GDP alone can lead to welfare-reducing policy decisions.
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Monetary Policy in an Oil-dependent Economy in the Presence of Multiple Shocks
Andrej Drygalla
Review of World Economics,
February
2023
Abstract
Russian monetary policy has been challenged by large and continuous private capital outflows and a sharp drop in oil prices during 2014. Both contributed to significant depreciation pressures on the ruble and led the central bank to give up its exchange rate management strategy. Against this background, this work estimates a small open economy model for Russia, featuring an oil price sector and extended by a specification of the foreign exchange market to correctly account for systematic central bank interventions. We find that shocks to the oil price and private capital flows substantially affect domestic variables such as inflation and output. Simulations for the estimated actual strategy and alternative regimes suggest that the vulnerability of the Russian economy to external shocks can substantially be lowered by adopting some form of inflation targeting. Strategies to target the nominal exchange rate or the ruble price of oil prove to be inferior.
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Switching to Good Policy? The Case of Central and Eastern European Inflation Targeters
Andrej Drygalla
Macroeconomic Dynamics,
No. 8,
2020
Abstract
The paper analyzes how actual monetary policy changed following the official adoption of inflation targeting in the Czech Republic, Hungary, and Poland and how it affected the volatilities of important macroeconomic variables in the years thereafter. To disentangle the effects of the policy shift from exogenous changes in the volatilities of these variables, a Markov-switching dynamic stochastic general equilibrium model is estimated that allows for regime switches in the policy parameters and the volatilities of shocks hitting the economies. Whereas estimation results reveal periods of high and low volatility for all three economies, the presence of different policy regimes is supported by the underlying data for the Czech Republic and Poland, only. In both economies, monetary policy switched from weak and unsystematic to strong and systematic responses to inflation dynamics. Simulation results suggest that the policy shifts of both central banks successfully reduced inflation volatility in the following years. The observed reduction in output volatility, on the other hand, is attributed more to a reduction in the size of external shocks.
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