Welfare Analysis Under The Non-traditional General Equilibrium Frameworks

In recent years,economists and policy makers gradually shifted from a focus on economic growth to personal welfare.How to increase the welfare of residents becomes the ultimate goal of public policies.However,the researchs about the impact mechanism of public policy on social welfare which can be interpreted as the total happiness of all the members in a society are few.There are two reasons.On one hand,the influence factors of the social welfare are various.On the other hand,traditional economics analysis methods have some defects in some aspects,for example the primary weakness of traditional partial equilibrium analysis is its neglect of the general-equilibrium repercussion;the shortcomings of traditional general equilibrium analysis method is it usually conducted under a very restrictive set of assumptions including the assuming of perfect competition;and traditional marginal analysis cannot be used for the analysis of some problems about the changes of labor division structures.Based on the above,this thesis employs two non-traditional general equilibrium analysis methods(mesoeconomic analysis and infra-marginal equilibrium analysis)and welfare function to do welfare analysis under these two non-traditional general equilibrium frameworks.It aims to investigate the influence mechanism of public policies(including monetary policies,fiscal policies and carbon reduction policies)on social welfare,and to give some policy recommendations.This research not only extends these two non-traditional general equilibrium models,but also promotes the theory and policy to go to analyze welfare which is the ultimate objective.The following describes the main contents and contributions of the present research.First,we expand and apply two non-traditional general equilibrium frameworks(mesoeconomic analysis and infra-marginal equilibrium analysis).In some sense,these two non-traditional general equilibrium frameworks overcome the deficiencies of traditional economic analysis methods,for example,no need of a assumption of perfect competition,including the analysis about some important problems of specialization and the division of labor.They are more practical and have huge development potential.Second,in this dissertation,a mesoeconomic analysis model including a representative firm,the employed,the unemployed and a government sector is built to analyze social welfare.In order to help policy makers maximize social welfare,we examine the impact of different macroeconomic policy factors(changes in monetary/fiscal policies)and changes of macroeconomic environment on macroeconomic variables and social welfare by applying this theoretical model.This study is the first to do welfare analysis under mesoeconomic framework which expands its usefulness.Third,we shows that without assuming unrealistic perfect competition money is no longer necessarily neutral by using mesoeconomic analysis model.By extending the benchmark model to a dynamic one,we use simulation to demonstrate that given various shocks(for example the global financial crisis),the economy could exhibit different patterns of business cycles.Hence,it explains that financial is much more important than suggested by traditional economic analysis,as it may have great influence on the real economy.Finally,this dissertation uses an infra-marginal perspective to illustrate a mechanism for green growth.Results testify carbon emission reduction policies proposed in this paper may promote the high carbon market structure to transform into a low carbon market structure.Moreover,we also make welfare analysis under this infra-marginal equilibrium green growth model,and certify that the combined carbon-tax and transaction-efficiency improvement method may increase social welfare more,compared to the traditional carbon-tax only.This is because the proposed policy may generate indirect network externalities due to the promotion of division of labor which leads to more economies of specialization.Finally,a numerical simulation demonstrates there exist some measures which may be good for the implementation of carbon emission reduction policies under certain conditions.