BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 12/2003:
Energy market liberalisation in the FSU - simulations with the GTAP model
Toni Riipinen ()
Abstract: This work considers effects of energy market
liberalisation in the countries of the former Soviet Union (FSU). Our
analysis is based on a computable general equilibrium (CGE) model called
the Global Trade Analysis Project (GTAP). This specialised model makes it
possible to evaluate effects in a general equilibrium set-up. Energy market
reforms are widely discussed in the literature, but the use of CGE models
has been limited. In the main part of the paper, we perform two
experiments. The first is a benchmark liberalisation experiment in which
all government taxes and subsidies are removed. The second is an attempt to
simulate an increase in the export capacity of energy commodities into the
European markets. In general, we find that liberalisation of FSU energy
markets would increase welfare in the EU countries, while in the FSU
welfare would decrease. This result is mainly due to the terms of trade
effect, as export prices of FSU countries decrease.
Keywords: energy; computable general equilibrium models; former Soviet Union; welfare analysis; (follow links to similar papers)
41 pages, October 26, 2003
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