„NEW IDEAS AND NEW GENERATIONS OF REGIONAL POLICY IN EASTERN EUROPE”
Long-term regional economic forecast for Hungary Macro modeling and regional downscaling Sebestyén Tamás Zsuzsanna MÁRKUSNÉ Tamás SEBESTYÉN ZSIBÓK Zsibók Zsuzsanna University ofMárkusné Pécs Faculty of Business and Economics
HAS Centre for Economic and Regional Studies
7 to 8 April 2016, Pécs, Hungary Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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The NAGiS project • National Adaptation Geo-information System (NAGiS) project: aims to develop a multipurpose geo-information system that can facilitate the policy-making, strategybuilding and decision-making process related to the impact assessment of climate change and founding necessary adaptation measures in Hungary • The aim of our current CERS project is to forecast the long-term socio-economic development path of Hungary until 2050, and to foster the adaptation to climate change • The results (data base) will be integrated into the NAGiS • NAGiS will be extended by new data describing the future socio-economic characteristics of Hungary Tamás Sebestyén – Zsuzsanna Márkusné
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The NAGiS project (cont.) • Our project investigated and quantified • demographical,
• economic and • land-use change
• on various geographical and temporal scales, • taking into account the interdependence of socioeconomic spatial processes and climate change
Tamás Sebestyén – Zsuzsanna Márkusné
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Framework • A complex problem – modular solution • Macroeconomic model • Problems with multisectoral models • Problems with multiregional models • First steps
• Two model blocs • A „DSGE” model which generates temporary macroeconomic steady state • „Drivers” generating long-term dynamics
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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DSGE model block • A mainsteam macro model • Mid-sized model • cc. 50 variables: corresponding all the important aspects of the economy
• Dynamic: • investments are led by intertemporal decision-making • additional dynamic elements (capital accumulation, lagged variables)
• Stochastic: • Bayesian estimation vs. calibration • Exogeneous shocks incorporating external short- and long-run effects (see: climate, technology etc.)
• General equilibrium • Assures a consistent system of interaction of macro variables
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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Main sectors of the DSGE model • Households – dynamic optimising decision-making • • • •
labour supply consumption investment holding of domestic government bonds
• Companies – dynamic optimising decision making • labour demand • capital demand • production
• Investment sector • produces capital • different productivity from companies’ productivity
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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Main sectors of the DSGE model (cont.) • Foreign sector • Export demand • Import supply (the domestic production is not a perfect substitute of the import goods – price structure) • Financing
• Government • • • • •
Levies taxes (after income, consumption, social security) Pays transfers Government spending Investments – creating infrastructure as an external effect in production Debt dynamics (stabilised through lump-sum taxes)
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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Long-run model block • Based on OECD ENV-Growth model • Exogenous shocks drive away the model form the steady state generated by the DSGE through which a long-run growth path can be simulated • productivity • climate • demography (labour supply, rate of inactivity)
• Long-run dynamics are led by productivity • A catching-up logic (through foreign productivity) • The speed of catching-up depends on the openness of the economy – as generated endogeneously by the DSGE model block
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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Climate in the long-run model • Climate change – enters the model as an index number, an exogenous driver • affects productivity • investments in infrastructure • …?
• Problems: • elasticities, estimation/calibration of other parameters
• Model runs: • „base” • „climate”
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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Macro forecast for the GDP growth in Hungary (base and climate scenario) 0,023 0,022 0,021 0,02 0,019 0,018 0,017 0,016 0,015 0,014
2049
2047
2045
2043
2041
2039
2037
2035
2033
2031
2029
2027
2025
2023
2021
2019
2017
2015
0,013
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Regionalisation of the macro model • County level • GDP • consumption • employment rate
• Forecast for growth rates • Forecast for absolute levels • Macro-level aggregation • government spending • infrastructure • …
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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Regional disaggregation • Estimating the co-movement of county-level variables with the national-level variables on the basis of historic data • Regression method • Projecting the revealed nature of co-movement to the future with the help of the predicted macro variables (GDP) • Exogeneous driver: working-age population
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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Regional disaggregation Forecasted national-level GDP growth rate
National GDP growth rate
Factor loading 1
County-level GDP growth rate
Forecasted county-level GDP growth rate
Factor loading 2
County-level employment growth rate
Reference period
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
Forecasted county-level growth rate of the working age population
Forecasting period
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Regional disaggregation • Estimating the co-movement of county-level variables with the national-level variables with historic data • Regression method • Projecting the revealed nature of co-movement to the future with the help of the forecast macro variables (GDP) • Exogeneous driver: working-age population • Problem: lack of reasonable feedback mechanisms • Alternatives: • extrapolating historic distribution of county-level variables • building a regional model which incorporates interregional migration of the factors of production, agglomeration forces etc.
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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County-level forecast for the GDP growth rate in Hungary 0,05
Budapest 0,04
Pest Fejér Komárom-Esztergom Veszprém
0,03
Győr-Moson-Sopron Vas Zala
0,02
Baranya Somogy Tolna 0,01
Borsod-Abaúj-Zemplén Heves Nógrád
0
Hajdú-Bihar Szabolcs-Szatmár-Bereg Jász-Nagykun-Szolnok
-0,01
Bács-Kiskun Békés Csongrád
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050
-0,02
15
County-level forecast for the employment rate in Hungary 75
70 Budapest Pest Fejér
65
Komárom-Esztergom Veszprém 60
Győr-Moson-Sopron Vas Zala
55
Baranya Somogy Tolna
50
Borsod-Abaúj-Zemplén Heves 45
Nógrád Hajdú-Bihar Szabolcs-Szatmár-Bereg
40
Jász-Nagykun-Szolnok Bács-Kiskun Békés
35
Csongrád
2051
2050
2049
2048
2047
2046
2045
2044
2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
30
16
County-level forecast for the growth rate of consumption in Hungary 0,08
Budapest Pest 0,06
Fejér Komárom-Esztergom Veszprém Győr-Moson-Sopron
0,04
Vas Zala Baranya 0,02
Somogy Tolna Borsod-Abaúj-Zemplén Heves
0
Nógrád Hajdú-Bihar Szabolcs-Szatmár-Bereg Jász-Nagykun-Szolnok
-0,02
Bács-Kiskun Békés Csongrád
2047 2048 2049 2050
2044 2045 2046
2040 2041 2042 2043
2037 2038 2039
2033 2034 2035 2036
2030 2031 2032
2026 2027 2028 2029
2023 2024 2025
2019 2020 2021 2022
2016 2017 2018
-0,04
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Directions for future research • Complex spatial and dynamic interactions are needed • Concerning the standard economic forecasting method: • sophistication of the frictions • a more detailed monetary and fiscal policy • econometric estimation of the parameters behind the TFP dynamics
• Modelling climate change • linking with land use and demography – with interactions • sectoral disaggregation: inclusion of the agricultural sector (e.g. land use as a factor of production) • interactions of technology and climate change
• Regional model: structural interrelations between regions • There is a lack of data base and methodology to correctly determine the parameters in past researches.
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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Thank You for Your attention!
http://www.rkk.hu http://nater.rkk.hu
Tamás Sebestyén – Zsuzsanna Márkusné Zsibók
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