PEP national policy conference held in Mongolia to discuss impact of external shocks on the Mongolian economy

October 26, 2016 | Ulaanbaatar, Mongolia

Local PEP researchers in Mongolia held a national policy conference to discuss their findings and recommendations relating to the impact of external environment changes on the Mongolian economy.

October 26, 2016 – Local PEP researchers in Mongolia held a national policy conference to present and discuss their findings on the impact of external shocks to the Mongolian economy.

More than 20 key stakeholders including government representatives, industry experts, academics and journalists attended the conference.

Selected under the PAGE initiative in 2014, this study uses a computable general equilibrium (CGE) model to test the effects two external changes on the Mongolian economy:

  • Scenario 1: A 30% increase in capital and stock owned by the coal sector.
  • Scenario 2: A 20% decrease in the international price of metal ores.

The team’s analysis indicates that growth in the coal sector (Scenario 1) would lead to increased GDP, investment, employment and household income. Furthermore, almost no Dutch disease effects were found, only a small reduction in exports of other commodities due to domestic currency appreciation. However, a decrease in the world price of metal ores (Scenario 2) would lead to decreased GDP, consumption, employment, and consumer prices; with the latter not sufficient to generate a competitive advantage in the international markets.

Based on these findings, the team recommends increased government support for the industries producing tradable goods, such as agriculture and manufacturing, as they can be both the engine for sustainable long-term growth and a buffer against short-term volatility caused by fluctuations in the world price of mineral products. Find out more about the research methods, findings and policy recommendations in PEP Policy Brief 138.

The team organized the policy conference to share their research findings and recommendations with policymakers, government advisors, industry experts and other key stakeholders. Among those in attendance were representatives of the Ministry of Finance Macroeconomic Department, the director of the National Statistical Office Macroeconomic Department, the director of the National Resource Governance Institute, an advisor to the Ministry of Labor Research Institute of Labor and Social Protection, and a senior economist of the Central Bank of Mongolia.

As well as the research findings and recommendations, the team also presented the PEP CGE model and the 2010 Mongolian social accounting matrix (SAM) that they had built for the study.

 

Main outcomes

Following the team’s presentations, the research team engaged those present in discussions on the influence of the mining sector on the Mongolian economy, the driving forces of sustainable long-term economic growth, and the potential to increase use of the CGE model for policymaking.

During these discussions, representatives of several government ministries expressed interest in the CGE model and stated its potential use for future policymaking. In particular, the team was asked by an economist at the Macroeconomic Department of the Ministry of Finance to present the model and findings to the other economists in the Macroeconomic Department. The Macroeconomic Department is responsible for forecasting key economic indicators in order to inform national macroeconomic management, and for developing techniques, tools and simulation models for analyses.

Additionally, the representatives of the Central Bank of Mongolia stated that the CGE model would be a very useful tool for their analyses of monetary policy.

The director of the Research Institute of Labor and Social Protection at the Ministry of Labor was particularly interested in the findings relating to labor and households. He stated that the Institute would collaborate on future research with the PEP research team.

Furthermore, the director of the Macroeconomic Department of the National Statistical Office explained that her department would soon be constructing a SAM and requested that the team assist in this endeavor.

Journalists from three national newspapers reported from the conference, with an additional interview with Ragchaasuren Galindev, the team leader, published on November 3, 2016.

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