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Economic Impacts of the Government Investment Policy: Dynamic CGE Model

Author

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  • Tsenguunjav Byambasuren

    (Bank of Mongolia, Ulaanbaatar, Mongolia)

  • Avralt-Od Purevjav

    (Cornell University, Ithaca, NY, USA)

  • Erdenetungalag Erdenekhuyag

    (Institute of Finance and Economics, Ulaanbaatar, Mongolia)

Abstract

The abundant natural resources can bring either positive or negative impact to the country's economy depending on the macroeconomic policies. Mongolia has massive mineral resource dominated by coal, copper, and gold. The Government of Mongolia has started to implement a number of infrastructure projects to decrease the mining project's cost burden caused from the country's weak infrastructure. This paper aims to assess the economic impact of the government investment policy towards the mining sector. In order to investigate the alternative options of the government investment policy, it uses a simulation analysis using the Dynamic Computable General Equilibrium (CGE) model which is developed for Mongolian economy. In the empirical analysis, this paper considers following two policy scenarios: Power plant and Copper refinery. The results suggest that both the policy scenarios have positive impact on the domestic economy, of which making the investment to power plant is the better option for the policy makers.

Suggested Citation

  • Tsenguunjav Byambasuren & Avralt-Od Purevjav & Erdenetungalag Erdenekhuyag, 2015. "Economic Impacts of the Government Investment Policy: Dynamic CGE Model," International Journal of System Dynamics Applications (IJSDA), IGI Global, vol. 4(1), pages 96-118, January.
    • Handle: RePEc:igg:jsda00:v:4:y:2015:i:1:p:96-118
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    Cited by:

    1. David Pierce & Simon Shepherd & Daniel Johnson, 2019. "Modelling the Impacts of Inter-City Connectivity on City Specialisation," International Journal of System Dynamics Applications (IJSDA), IGI Global, vol. 8(4), pages 47-70, October.
    2. Davaajargal Lkhagva & Zheng Wang & Changxin Liu, 2019. "Mining Booms and Sustainable Economic Growth in Mongolia—Empirical Result from Recursive Dynamic CGE Model," Economies, MDPI, vol. 7(2), pages 1-16, May.
    3. Ragchaasuren Galindev & Tsolmon Baatarzorig & Nyambaatar Batbayar & Delgermaa Begz & Unurjargal Davaa & Oyunzul Tserendorj, 2019. "The Economic and Environmental Impact of Foreign Direct Investment on the Mongolian Coal-Export Sector," Working Papers MPIA 2019-21, PEP-MPIA.

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