welfare_analysis
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| welfare_analysis [2020/03/26 08:31] – matsz | welfare_analysis [2020/03/31 07:44] – matsz | ||
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| A key element in analysing policy changes from an economic viewpoint is to look at welfare changes. The “classical” elements of a welfare analysis are changes in consumer and producer rents and for the tax payer. That concept is also followed in CAPRI. | A key element in analysing policy changes from an economic viewpoint is to look at welfare changes. The “classical” elements of a welfare analysis are changes in consumer and producer rents and for the tax payer. That concept is also followed in CAPRI. | ||
| - | For consumers, CAPRI uses the money metric concept. It can be broadly understood as a measurement for changes in the purchasing power of the consumer. The concept is also linked to the expenditure function as introduced in Section | + | For consumers, CAPRI uses the money metric concept. It can be broadly understood as a measurement for changes in the purchasing power of the consumer. The concept is also linked to the expenditure function as introduced in Section |
| \begin{equation} | \begin{equation} | ||
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| Where //e//(.) is the expenditure function, \(Y^r\) is expenditure in the reference situation, and \(cpri^r (cpri^s)\) is the price vector in the reference (scenario) situation. The money metric is thus the expenditure the consumer would need at reference prices to be as well of as if facing the scenario prices at reference income. The difference of money metric for a given scenario to money metric in the reference situation is the equivalent variation. | Where //e//(.) is the expenditure function, \(Y^r\) is expenditure in the reference situation, and \(cpri^r (cpri^s)\) is the price vector in the reference (scenario) situation. The money metric is thus the expenditure the consumer would need at reference prices to be as well of as if facing the scenario prices at reference income. The difference of money metric for a given scenario to money metric in the reference situation is the equivalent variation. | ||
| - | Considering the generalised Leontief form of the indirect utility function used in CAPRI (compare with Section | + | Considering the generalised Leontief form of the indirect utility function used in CAPRI (compare with Section |
| \begin{align} | \begin{align} | ||
welfare_analysis.txt · Last modified: 2022/11/07 10:23 by 127.0.0.1