Development and applications of the HERMES model (2)

Objective

1) maintenance of the HERMES models:update of the data files and re-estimation of the model

2)enhancement of the HERMES models : introduction of a financial block and supply effects

3) participation in the European HERMES Projection (Club HERMES)

4) energy and environment simulations : impact of environmental policies (energy savings investments). Application for FR, IT, GR, ES, PT.

The research project consists of sundry activities in connection with the HERMES models of France, Italy, Greece, Spain, Portugal :

1) Maintenance and improvement of the various HERMES models : upkeep of data bases with the latest available information, re-estimation and correction of the models on the basis of the new data introduced.

2) Introduction of a single monetary and financial block with accounting and behaviourial relations aimed at rendering the interest rates and exchange rates endogenous variable and incorporating the effects on the rest of the economy. The financial models will have important feedback on the real sector of the economy through the relations with the exchange rate. Study of effect of financial variables on the existing models properties.

3) Further analysis and evaluation of the supply mechanisms already present in the HERMES models: generalisation of a profitability-depending investment function, influence of the capacity utilization rate in the exports and imports equations, general supply effects as defined in the "Internal market study", test of experimental methods (Halliwell, Artus).

4) Participation in a Medium-term European economic projections, to be published in 1990. This will include contributions to discussion of assumptions for exogenous variables, analysis of the simulations results and any assistance to the Club Hermes to finalise the forecast.

5) Realisation of an environmental study on macroeconomic impacts of pollution abatement investments : the study examines the consequences of an increase of the private investments due to SO2, NOx abatement investments (the production costs are initially increased by the capital costs of the environmental measures. The final demand is stimulated by the impacts on investment). A second part of the study examines two economic agents behaviour : increase of firm production prices transfers of government to the private sector. In the latest case, three financing methods are discussed : issuing Governmental debt, increasing VAT rates or increasing direct taxes paid by households.

Programme(s)

• FP2-JOULE 1 - Specific research and technological development programme (EEC) in the field of energy - non-nuclear energies and rational use of energy - (JOULE), 1989-1992

Funding Scheme

CSC - Cost-sharing contracts

Coordinator

Eureco SARL

Address

103 Rue Sadi Carnot
92170 Vanves
France

Participants (6)

Center of Planning and Economic Research

Greece

Address

10680 Athens

Chambre de Commerce et d'Industrie de Paris (CCIP)

France

Address

27 Avenue De Friedland
75382 Paris

Fundación Universidad-Empresa de Madrid

Spain

Address

5,Serrano Jover
28015 Madrid

NATIONAL TECHNICAL UNIVERSITY OF ATHENS

Greece

Address

Iroon Polytechnioy 5
15780 Athens

PROMETEIA CALCOLO SRL

Italy

Address

Via G. Marconi 43
40122 Bologna

UNIVERSIDADE CATOLICA PORTUGUESA

Portugal

Address

Palma De Cima
1649-023 Lisboa