du bing, researcher asia pacific energy research centre (aperc) 3. the aperc macroeconomic model...
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DU Bing, ResearcherAsia Pacific Energy Research Centre (APERC)
3. The APERC Macroeconomic Model
APERC Workshop at EWG 46Da Nang, Viet Nam, 18 November 2013
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Contents
Background1
Model Structure2
Results and Discussions3
3
1. Background
• T he role of m acroecon om ic m odel in the A P E C E n ergy D em an d an d Supply O utlook
• The role of macroeconomic model in the APEC Energy Demand and Supply Outlook
Industry demand model
Electricity supply model
Transport demand model
Residential & Commercial demand model
Other models …
Macroeconomic model
(Population, GDP, Savings rate, Investment rate, Employment
rate, Education, etc. )
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Example of using macroeconomic model
Macroeconomic model
GDP per capita,Population …
Steel ProductionForecast
Steel SectorEnergy Demand
Energy Intensity Data
How can the macroeconomic model be used to project steel energy demand?
5
Why do we need a new macroeconomic model?
• Previously we used the IHS Global Insight data as our macroeconomic assumptions.
• Reasons not to use it anymore:We cannot explain (Models not available)Data not available for Brunei and PNGSome strange results (bias toward small economies such as
Singapore and Hong Kong)Expensive…
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Why do we need a new macroeconomic model?
Projections Time coverage Economy coverage Detailed Document Database Source
Code Remarks
CEPII 1980-2050, annual worldwide, 147 economies O O O using energy as input
EIA 2006-2035, 5-year intervals 22 selected economies X X X
USDA 1969-2030, annual worldwide, 190 economies X O X
IMF 1980-2018, annual worldwide, 188 economies X X X
OECD 2011, 2030, 2060 42 selected economies O X X
• There are currently many other macroeconomic projections. However, it is difficult to use their results directly due to data, document and source code availability, as well as time and economy coverage problems.
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The model we are pursuing …
Open
ProvenSimple
Accurate
Comprehensive
Easy to understand, including only the necessary elements
Producing acceptable results for long-term projection
Covering all 21 APEC economies
Based on proven, widely adopted approach
Using open, published research and authoritative data sources
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2. Model structure
Total GDP
Total Factor Productivity,
TFP (A)
Catch-up effect
Education effect
Capital (K)
Savings rate
Income level Income growth rate
Economic activity rate
Culture, institutions and other
factors
Investment rate
Relationship between
savings and investment
rate
Regional differences
Labor (L)
Population structure
Economic activity
rate of age groups
𝑌=𝐴(𝑡)𝐾 𝛼𝐿𝛽
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Three main factors in the model
• Capital accumulation is determined by investment rate (the share of investment in GDP) and capital depreciation rate. investment rate is estimated based on the relationship between savings rate and investment rate.
0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
Savings rate
Investment rate
• Labour is measured by the total economically active population. For each age group, we have population and economic activity rate data from the ILO database.
Population structure
• TFP growth can be explained by a catch-up effect, an education effect and an interaction term between education and catch up.
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3. Results and Discussions
Australia
Brunei
CanadaChile
China
Hong Kong
Indonesia
JapanKore
a
Malaysia
Mexico
New ZealandPNG
Peru
Philippines
Russia
Singapore
Viet Nam
Thailand
United States
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Projection of GDP per capita
1980
2012
2035
GD
P p
er c
apit
a (2
005
USD
PP
P)
Income growth trend
11
12
Total GDP growth rate
Australia
Brunei
CanadaChile
China
Hong Kong
Indonesia
JapanKore
a
Malaysia
Mexico
New ZealandPNG
Peru
Philippin
es
Russia
Singapore
Viet Nam
Thailand
United States
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
1980-20122012-2035
An
nu
al G
DP
gro
wth
rat
e
13
Comparison with the CEPII projection
Australia
Brunei
CanadaChile
China
Hong Kong
Indonesia
JapanKore
a
Malaysia
Mexico
New ZealandPNG
Peru
Philippines
Russia
Singapore
Viet Nam
Thailand
United States
0
20,000
40,000
60,000
80,000
100,000
120,000APERC 2035CEPII 2035
GD
P p
er c
apit
a (2
005
USD
PP
P)
