MACROMODELS INTERNATIONAL CONFERENCE, POZNAŃ 2011
Jan Gadomski,
Systems Research Institute of Polish Academy of Sciences
TIME-VARYING DISTRIBUTED LAG MODELS IN THE FLOW SYSTEMS
ABSTRACT
The paperexaminesdeals with the growth ofanalyses optimum emission policy inan economy described by the three-sector model. The Aaim of the model is to investigate an adjustment of the whole economy as well asand the sectors to the instruments of emission limiting policy. Imposition of the emission limits and prices forces enterprises to replace cheaper, more polluting production technology by a cleaner, however more capital-intensive onetechnology change. The model consists of three sectors producing, respectively, the intermediary goods (raw materials and energy), consumer goods, and investment goods (capital assets).. Gross oOutput of each sector is determined by the demand for its product, while production capacity is determined by the Leontieff two-factor production function. Demand for the product of a sector is a sum of demands generated inof all sectors. Enterprises choose betweenAlthough there is a choice of competing technologies, howeverbuthowever specific imposrestricitions duerelated to of the emission limits determines the winning one. In response to the imposition of an emission limit, in the medium- – term the economy achieves (not assuming an influence of the technical progress) zero-growth equilibrium. In the long-term active emission limit allowsadmits a non- zero growth rate determinpendented on by the rate of reduction of emission coefficients. In order to avoid micro instability the regularization has been introduced systems composed of flows between certain stocks, where the basic element consistsmprises of a stock and the flows respectively feeding (inflow) and exhausting that stock (outflow), and the latter isbeing described using the time-varying distributed lag model with the inflow rate being the independent variable. Such elements are common in models used to describe consumer demand, levels of gross or net fixed assets, bank loans outstanding, as well as in demography, etc. The concept of the time-varying distributed lag models in this paper is associated with changes of the lag distribution which can be caused by seasonality, or evolving behavior/preferences of economic agents. Paper presents also the properties of complex structures being the result of summing and/or superposition of the distribution lag models within the flow systems. In particular, parameters of lag distribution, such as the mean lag and variance of such models are sanalyzed.