Impulses for Growth and Employment through Profitable Savings in ...

More documents

Recommendations

Info

sion used in this paper is based on the German Federal Agency for Statistic’s new NACE classification of national accounting. INFORGE is the economic part of the Panta Rhei model that has proved itself as an instrument for the analysis of environmental-economic relationships 14 . The INFORGE model’s strong performance potential is based on the INFORUM philosophy 15 that is characterised by the bottom-up and complete integration construction principles. The bottom-up construction principle says that each of the 59 sectors of the national economy is modelled in great detail and that the national economic variables are formulated through explicit aggregation within the model. The construction principle complete integration consists of a complex and simultaneous modelling that depicts inter-industrial linkages as well as the development and distribution of income, the government’s redistribution actions and income use by private households for various goods and services. ket, 1996-2005, in: Communication Strategies, No. 28, 4th Quarter 1997, pp. 105-127; or: Meyer, B. and G. Ewerhart, Lohnsatz, Produktivität und Beschäftigung. Ergebnisse einer Simulationsstudie mit dem disaggregierten ökonometrischen Modell INFORGE, in: Schnabl, H. (ed.), Innovation und Arbeit: Fakten – Analysen – Perspektiven, Tübingen 1997, pp. 253-267; or: Meyer, B. and G. Ewerhart, T. Siebe, Strukturwandel, Arbeitsplätze und dienstleistungen. Analyse des sektoralen Strukturwandels in der Beschäftigung des IHK-Bezirks Münster für die Jahre 1978 bis 1996 und Prognose bis zum Jahr 2000, Expertise commissioned by the Münster Chamber of Trade and Commerce, 1998; or: Meyer, B. and G. Ewerhart, T. Siebe, Tertiarisierung ohne wettbewerbsfähige Industriebasis?, in: Raumforschung und Raumordnung, No. 5/6-99; or: Meyer, B. and G. Ahlert, Die ökonomischen Perspektiven des Sports. Eine empirische Analyse für die Bundesrepublik Deutschland, Schriftenreihe des Bundesinstituts für Sportwissenschaft, Volume 100, Schorndorf 2000; or: Lutz, C. and B. Meyer, P. Schnur, G. Zika, Projektion des Arbeitskräftebedarfs bis 2015. Modellrechnungen auf Basis des IAB/INFORGE-Modells, in: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung (MittIAB), 3/2002, pp. 305-326. 14 Frohn, J. and P. Chen, B. Hillebrand, W. Lemke, C. Lutz, B. Meyer, M. Pullen, Wirkungen umweltpolitischer Maßnahmen. Abschätzungen mit zwei ökonometrischen Modellen, Heidelberg 2003. 15 Almon, C., The INFORUM-approach to Interindustry Modelling, in: Economic Systems Research 3, 1991, pp. 1-7. The disaggregated structure of the INFORGE model is reflected in an enormous but consistent information processing: The nearly 40,000 model equations are embedded in the fully endogenised account system of national economic accounting. The model is characterised by a very high degree of endogenisation. Exogenously specified are primarily only a few tax rates, labour supply and the global market variables of the international GLODYM system that is an enhancement of the global COMPASS model 16 . INFORGE is an econometric input-output model that can be described as an evolutionary model 17 . The behavioural equations model decision-making routines that are not explicitly interpreted from the optimisation behaviour of agents but are based on limited rationality. Prices are explained in terms of monopolised pricesetting behaviour. The model describes time as historical and irreversible. Capital adjustment generates path independence. The input-output approach is commonly viewed as demand-oriented modelling. However, this is not the case for INFORGE. Even if it is true that demand determines production in INFORGE, all goods and factor demand variables depend upon, amongst other things, relative prices, whereby the prices themselves are determined by companies’ unit costs in terms of a price-setting hypothesis. In this case, the difference vis-à-vis general balance models, in which a competitive market is modelled, is in the implicit market form, not in the emphasis of one or the other side of the market. In other words, companies choose their sales price on the basis of their cost situation and the prices of competing imports. Demand reacts to this with a decision that then determines the amount of production. In this way, supply and demand elements are equally prevalent. 16 Meyer, B. and K. Uno, COMPASS – Ein globales Energie-Wirtschafts-modell, in : ifo-Studien, No. 45, 1999, pp. 703-718. Meyer, B. and C. Lutz, Ökoeffiziente Dienstleistungen…, l.c. 17 Meyer, B., Strukturanalyse, in: Herrmann-Pillath, C. and M. Lehmann-Waffenschmidt (eds.), Handbuch Evolutorische Ökonomie, Berlin 2003. 5
Besides the level of input-output computation that is profoundly structured in 59 production or economic sectors, the model for the computation of the national economic variables contains the account system of the national economic accounts of the Federal Republic of Germany. This system contains all income redistribution including social security and taxation between the government, private households and business and thus enables the computation of available incomes which themselves are important determinants of final demand. Moreover, the financing balances of institutional transactors are determined. This means that governmental budget restrictions are also included in the model. The complete fiscal policy is therefore also endogenously embedded in the system. Monetary policy, in as much as it influences interest levels, is also endogenous. Scenarios Examined The period 2004-2015 was chosen for the appraisal as this is an appropriate time line for a political programme that seeks to change efficiency structures on a wide scale in the economy at large. The effects of profitable dematerialization are examined by using the values achieved in 2015 on the basis of different scenarios and comparing them to the zero variant (endogenous extrapolation of the status quo in the model): • In Scenario I “Imperfect Markets” profitable dematerialization takes place within the environment of present-day wage and price formation in Germany. • In Scenario II “Wage Competition” it is assumed – in variance to Scenario I – that productivity gains through dematerialization do not lead to higher wages but instead correspond to those of the base scenario. • In Scenario III “Price Competition” we assume – in variance to Scenario I – that competitive pressure forces companies to pass on nationally achieved productivity gains to consumers in the form of lower prices. Wage formation corresponds to that in Scenario I. Scenarios II and III do not confer with present-day economic practice but point to the numerous welfare gains that can be achieved on the labour and product markets on the basis of more complete competition. Common Assumptions Across all Scenarios Simplified assumptions are necessary for depicting the scenarios in INFORGE. In all scenarios, profitable dematerialization is depicted through a linear reduction of material costs per unit of production in the manufacturing sector and in public administration by 20% across the study’s time line. In several ways, this is a conservative assumption: • Company practice shows double as much potential (20% of manufacturing costs instead of 20% of material costs). • The scenarios limit the cost effects to production in the manufacturing sector and in public administration. This means that the economic sectors with the highest dematerialization potentials are addressed but that a political programme aimed at profitable dematerialization will have effects on other sectors too through respectively optimised products and know-how • transfer. The development of new products is not explicitly taken into account in the scenarios. In reality, however, a strong surge toward the dematerialization of production and product use will not only reduce costs but also create new products. Cellular phones are a case in point which only became a mass market after miniaturisation with concomitant cost reductions and easier usability occurred. As such efficiency gains do not simply fall from the heavens but require innovation and investment by companies annual savings need to be juxtaposed with one-time expenditures 33% of which consist of demand for services close to the company and 66% of which consist of fixed investment. With respect to material cost reduction (50% of total industrial costs) this onetime expenditure amounts to a simple annual saving while with respect to energy cost reduction (2% of industrial costs) it 6
Page 1 and 2: Impulses for Growth and Employment
Page 3 and 4: ment with an average payback of twe
Page 5: sults are on hand with respect to a
Page 9 and 10: private consumption. If we subtract
Page 11: Summary of Results Computations wit

Impulses for Growth and Employment through Profitable Savings in ...

Create successful ePaper yourself

Delete template?

Save as template?