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Does timing and announcement matter? Restricting the production of pigs within a dynamic CGE model

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  • Adams, Philip D.
  • Hansen, Lill Thanning
  • Jacobsen, Lars-Bo

Abstract

In this paper we address the issue of timing and announcement within a dynamic applied general equilibrium model of the Danish economy. Specifically we analyse the introduction of a quota on the production of pigs. Two scenarios are analysed, namely the introduction of a once-off quota without any previous announcement and secondly, an announced gradually phased in production quota. Our findings suggest that the adjustment path is smoother when the policy is announced compared with the one being implemented without warning. This is the result of investors anticipating correctly future adjustments in prices and rental rates when making their investment decisions. Hence, the capital stock starts to adjust from the start of the simulation. When the quota is implemented without warning investors adjusts fully when the quota is implemented. In the long run, however, we find that the alternative timing strategies lead to similar results.

Suggested Citation

  • Adams, Philip D. & Hansen, Lill Thanning & Jacobsen, Lars-Bo, 2001. "Does timing and announcement matter? Restricting the production of pigs within a dynamic CGE model," Conference papers 330949, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:330949
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    File URL: https://ageconsearch.umn.edu/record/330949/files/464.pdf
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    References listed on IDEAS

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