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The Economy‐Wide Effects of the BSE Crisis: A CGE Analysis
Author(s) -
McDonald Scott,
Roberts Deborah
Publication year - 1998
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.1998.tb01285.x
Subject(s) - computable general equilibrium , subsidy , economics , shock (circulatory) , government (linguistics) , macro , economic interventionism , macroeconomics , international economics , market economy , medicine , linguistics , philosophy , politics , political science , law , computer science , programming language
A Computable General Equilibrium (CGE) model of the UK economy is used to investigate the economy‐wide effects of the BSE crisis. The impact of two alternative government strategies for dealing with the crisis, support buying and subsidy payments, are compared with the scenario of no government intervention. The results indicate that whilst the macroeconomic consequences of the crisis may be small in percentage terms, substitution and resource re‐allocation effects are substantial. In particular, the impact spreads far beyond those directly impacted by the shock with some sectors of the food industry benefiting. Moreover the alternative government strategies have very different macro economic and intersectoral effects. It is argued that the results support the further development of the model and underlying database.