MacroeconomicimpactofPannonia
EthanolinHungary
SimulationresultsfromacalibratedCGEmodel
WrittenforPannoniaEthanolZrt.
Author:
Major,Klára
Budapest
2016.03.30.
„ForApplicableKnowledge”
HÉTFAKutatóintézetésElemzőKözpont
H-1051BudapestOktóber6.utca19.IV/2
E-mail:[email protected]
Tel.:+36-30/730-6668
Fax.:+36-1/700-2257
www.hetfa.hu
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
TableofContents
ExecutiveSummary........................................................................................................................3
Introduction......................................................................................................................................6
Approach............................................................................................................................................7
BioethanolProductionatPannoniaEthanol..........................................................................9
BaseScenario:MacroeconomicImpacts............................................................................................................11
BaseScenario:DisaggregationoftheIndirectEffect...................................................................................15
BaseScenario:SectoralDistributionoftheIndirectImpacts...................................................................17
InvestmentScenario...................................................................................................................................................19
FarmerScenario...........................................................................................................................................................22
Appendix1.Hétfa-CGEmodeloftheHungarianEconomy.............................................25
Appendix2.Tables.......................................................................................................................29
A2.1Basescenario.......................................................................................................................................................29
A2.2InvestmentScenario........................................................................................................................................32
A2.3FarmerScenario.................................................................................................................................................35
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
ExecutiveSummary
1. PannoniaEthanolZrt.producesbio-ethanol,mostofwhichissoldabroad.Thefactorywas
constructedmainlyin2010-2011,butenlargementinvestmentshavebeenundertakenon
aconstantbasisandarecontinuingtoday.Thefactorystartedproductionin2012andhas
increasedproductionlevelseveryyearsince,with2016certaintocontinuethattrendand
2017 more than likely to continue that trend. The aim of this study is to measure and
explaintheoverallimpactofPannoniaEthanolontheHungarianeconomy.
2. The overall impact is the sum of direct and indirect impacts. Pannonia Ethanol's direct
impactscomefromitsownemployment,valueadded,export,andtaxpayments.Indirect
impacts,bydefinition,arethesumoftheotherimpactsthatPannoniaEthanolhasonthe
rest of the economy. The indirect effect is estimated from a calibrated CGE model for
Hungaryforthe2010-2020period,forwhich2016-2020isbasedonprojections.
3. Pannonia Ethanol's suppliers earn income, generate valued added and create jobs as a
resultoftheirsalestoPannoniaEthanol.Therefore,thematerialinputs(maize,natural
gas, electricity, chemicals, etc.) needed for producing ethanol increase demand within
certain sectors of the economy. We assume that without the existence of Pannonia
Ethanol,thisadditionaldemandwouldnotexist.Theindirecteffectseekstoquantifythe
income(valueadded),employment,taxpayments,etc.generatedfromtheimpactofthis
additionaldemandonPannoniaEthanol'ssuppliers,andonthesuppliersofthesuppliers,
etc.Theindirecteffectsarethesumofallsuchimpactscascadingthroughtheinput-output
linkagesintheeconomy.
GDP*
Employment**
Budget*
Export*
Import*
TradeBalance*
direct
79
78
14
590
1
589
2010-2015
indirect
387
1422
98
-156
352
-508
total
466
1500
111
434
353
81
direct
335
147
38
1387
0
1387
2016-2020
indirect
387
1166
66
-361
505
-865
Total
721
1313
103
1026
505
521
*m€
**yearlyaverage,persons
4. PannoniaEthanol'stotalimpactonGDPexceeds1bneurosintheestimationperiod.The
impact on employment is 1300-1500 workers, 90% outside Pannonia Ethanol. Tax
revenuesincrease~200m€,ofwhich75%areindirect.PannoniaEthanol'sethanoland
animalfeedaresoldabroad,whichincreasesexports.However,otherproducersmight
sell more at home due to Pannonia Ethanol's impact on the economy, and therefore
PannoniaEthanol'stotalimpactonexportsisactuallylowerthanitsdirectimpact.Thisis
because as domestic goods become relatively more expensive imports increase and
exportsdecrease.Nonethelessthetotalimpactonthetradebalanceispositive.
5. ThetotalimpactofPannoniaEthanol’sproductiononGDPisabout0.3€foreachliterof
bio-ethanolproduced.Ofthis,approximately0.15€/literisthevalueaddedofPannonia
Ethanolitself,whereas0.15€isavalueaddedthatisgeneratedelsewhereintheeconomy.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
6. AsHungaryisasmall,openeconomy,theextrademandthatanewfactorypresentsfor
domestic suppliers can always be very easily satisfied with foreign goods. The extra
demand increases the prices of local goods, but as local goods are close substitutes for
foreign goods, imports will increase and exports will decrease. Within the CGE model,
adjustmentmechanismsfinallywillnotleadtohighpriceresponsesbut,asaresult,most
of the extra demand will benefit foreign suppliers rather than increase domestic
production.
7. This general adjustment mechanism is illustrated in the current case study. The
constructionofthebioethanolfactoryitselfpresentedalargedemandfortheconstruction
industry, which, being a non-tradable industry, had a large impact on GDP and
employment as well. However, when the production of bio-ethanol began, much of the
demand went to agriculture, or, more specifically to maize farmers. Within the EU
commonmarket,domesticandforeignagriculturalproducts,especiallymaize,areclose
substitutesforeachother.Therefore,intheprojectionperiodtheshareofindirectimpacts
islowerthanintheconstructionperiod.However,theoverallimpactontheHungarian
economyisacontributiontobothgrowthandjobcreation.
8. The current study includes two alternative scenarios. One assumes continuing
investments,whichcompanymanagementhavecommunicatedismoreconsistentwith
theactualplansofPannoniaEthanolthanaretheBaseScenarioassumptions.Pannonia
Ethanol'sproductionvolumeshavebeengrowingata12.2%annualratesince2012.The
BaseScenarioassumesthatthisrateofincreasewillcontinuein2016,butthatthisrateof
increase does not continue thereafter. Therefore, an Investment Scenario has been
simulatedbyassumingthatPannoniaEthanol'sinvestmentswillcontinueinthefutureat
aratesimilartothepast.ThefollowingtablesummarizestheresultsoftheInvestment
Scenario on the main macroeconomic variables (m€) for the projection period (20162020)andshowsthedifferencewiththeBaseScenario.
GDP*
Employment**
Budget*
Export*
Import*
TradeBalance*
Reinvestedearnings
direct
indirect
424
611
147
2024
44
118
1795
-444
0
720
1795
-1164
total
1035
2171
162
1352
720
631
direct
89
0
6
408
0
408
Difference
indirect
224
858
52
-83
215
-299
total
314
858
59
326
215
110
*m€
**yearlyaverage,persons
Continuedinvestmentswouldaddatotalof314m€totheestimatedoverallGDPimpact
ofPannoniaEthanol,whichisanalmost50%largerimpactthanifsuchinvestmentsstop.
Employment would increase from 1300 persons to more than 2100 persons, and this
increasewouldcomeentirelyfromindirecteffects.Taxreceiptswouldincreasebyabout
10m€ayear.Thedeclineofinducedexportswouldbeless,butnonethelessstillrather
significant. At the same time, imports would increase. The overall impact on the trade
balancewouldremainpositive;itmightbe110m€largerthanintheBaseScenario.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
9. The study's second alternative scenario involves the nature of Pannonia Ethanol's
principaltradingpartnerintheHungarianeconomy,themaizefarmer.TheCGEmodel
treatsthemaizefarmerasbeingstimulatedtomakeinvestmentsinincreasedproduction
inresponsetoanincreaseinoveralldemandformaizeintheEuropeanUnion,ratherthan
beingresponsivetolocaldemand.ThisisbecausetheCGEmodeltreatsagricultureasa
tradable sector, unlike construction, which is a non-tradable sector. Within the CGE
model,ademandformaizeinHungarycouldbemetfluidlywithimportsfromanyother
partofEurope,whereasademandtoexpandpartofthefactorywouldonlybesatisfied
with a contract to a Hungarian construction company. Within the CGE model, the
Hungarianmaizefarmerwouldnotreactanydifferentlytoanethanolplantnexttohis
fieldthantoanethanolplantconstructedinNorway.
However,theHungarianagriculturalcommunityhasobjectivelytakenastronginterestin
Pannonia Ethanol, and there is substantial anecdotal evidence that construction of the
factoryhasbeenrespondedtobythesefarmerswithanuptickininvestmentsoftheirown
toincreaseproduction.Accordingly,aFarmerScenariohasbeensimulatedbyassuming
thatthemaizesectorisnon-tradable.Thefollowingtablesummarizestheresultsofthe
Farmer Scenario on the main macroeconomic variables (m€) for the estimation period
(2010-2020)andshowsthedifferencewiththeBaseScenario.
GDP*
Employment**
Budget*
Export*
Import*
TradeBalance*
FarmInvestments
direct
indirect
424
147
44
1795
0
1795
2513
8476
238
-499
639
-1138
total
2937
8623
283
1297
639
657
Difference
direct
indirect
89
0
6
408
0
408
2126
7310
172
-138
134
-273
total
2216
7310
180
271
134
136
*m€
**yearlyaverage,persons
If the maize sector was not a tradable sector, this would add a total of 2216m€ to the
estimatedoverallGDPimpactofPannoniaEthanol,whichisanalmostfourtimeslarger
impact.Employmentwouldincreasefrom1300personstomorethan8600persons,and
thisincreasewouldcomeentirelyfromindirecteffects.Taxreceiptswouldincreaseby
about30m€ayear.
The maize sector in Hungary is neither perfectly tradable or non-tradable and so the
purposeoftheFarmerScenarioistoprovideaceilingonPannoniaEthanol'simpacts,with
theBaseScenarioprovidingafloor.IfagriculturalexpertsweretoconcludethatPannonia
Ethanolhasastrongstimulativeeffectonfarm-levelinvestmentsinHungary,thenthis
rangewouldbeimportanttoknow,andtheexistenceofsuchastrongeffectwouldmean
thattheFarmerScenariocouldbemoreaccurateinitsestimatethantheBaseScenario.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Introduction
Pannonia Ethanol produces bio-ethanol, most of which is sold abroad. The factory was
constructedmainlyin2010-2011,butenlargementinvestmentshavebeencontinuoussincethen.
Thefactorystartedproductionin2012andhasincreaseditsethanolproductioneveryyearsince.
Thefullcapacitywasnotreachedevenbytheendof2015,howeverintheupcomingyearsthe
factoryisexpectedtoreachfullcapacity.
Thecurrentpaperintroducestheresultsofarecentmacroeconomicsimulationanalysisthataims
at understanding how the factory influences the Hungarian economy. The main aim of this
analysis is to estimate the impact on employment and GDP, including all the jobs and income
created by other participants in the vertical supply-chain of production. This ambitious goal
requirestheapplicationofageneralequilibriumframework,inwhichinter-firmlinkagescanbe
takenintoaccount.Therefore,astandardtool,aCGEmodelhasbeenbuiltandcalibratedtothe
Hungarianeconomyandsimulateshowthefactoryinfluencesincomesandjobs.
The present analysis employs a mixed approach to carry out an ex-post analysis of Pannonia
Ethanol.Anearlierex-antestudybyHétfaResearchInstituteestimatedtheexpectedimpactsof
PannoniaEthanol1.Inthatpaper,Szabó-Morvaiusedadifferentmethodtocalculatetheex-ante
impactofthebuildingupoftwobioethanolfactories(inDunaföldvárandMohács),ofwhichonly
onefactorywasbuiltandstartedproduction.Therefore,theresultsofthetwoimpactanalyses
cannotbedirectlycompared,althoughtheconclusionsaregenerallysimilar.
Thisanalysisisrestrictedtothe2010-2020period,ofwhich2010-2015canbeconsideredasthe
past, and so that part of the estimation to be of an actual impact on the Hungarian economy.
Howeverthe2016-2020periodisconsideredasaprojection;numbersrelatingtothisperiodare
an ex-ante estimation, and as such dependent upon certain assumptions. One of these
assumptionsisthecontinuationoftheinvestmentactivitiesofPannoniaEthanolitselfathistoric
levels. Therefore, we present two different scenarios considering either that there is no
continuation of investment activities in the future, or there is. The results show that ongoing
investments increase the positive impact to the Hungarian economy for both GDP and
employmentbecausethereisalargerincreasefortheproductsofdomesticsuppliers.
Itturnsoutfromtheanalysisthateconomicimpactsarehighlyinfluencedbythefungiblenature
of Pannonia Ethanol's inputs. The main input of bioethanol production is GMO-free maize, for
whichthereisanopenandfreemarketacrossEurope.Moreover,thegooditselfistradedinliquid
cross-bordercommoditymarkets,sodomesticsuppliersalwayshavetheoptiontosellitabroad.
Therefore,thepresenceofPannoniaEthanolplaysaroleintheeconomythatgoesbeyondthe
scopeofanyCGEmodel;itmaystabilizethedomesticdemandformaizewhichinturnsworksas
aninsurancemechanismfordomesticmaizeproducers.Itmayalsostimulatelocalinvestmentsin
expandedmaizeproductioninexpectationofsalesnotintothegeneralEurope-widemarketbut
specifically to Pannonia Ethanol. Unfortunately, these responses can not be modeled in a CGE
framework, and so therefore we created a Farmer Scenario that assumes agriculture to be a
closed, non-tradable sector. Definitely, in practice, agriculture and especially maize production
1Szabó-Morvai,Ágnes(2012):EstimatingtheEffectsofPannoniaEthanolontheHungarianEconomy,Hétfa
ResearchInstitute,WorkingPaper.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
activities are not restricted to complete domestic marketing and sales. But it is important to
understand the full extent to which domestic agriculture could be affected by the presence of
PannoniaEthanol.Ourapproachisanapproximation,basedonourknowledgeaboutthelabor
intensityofproductionintheagriculturesector,throughwhichwecanunderstandhowlargely
thesectoritselfmightbeinfluencedbythepresenceofPannoniaEthanol.
This paper is structured as follows. The main body of the text focuses on the main modelling
questions without going too much into the details of technical issues, which are addressed in
Appendix1.Thenextsectionintroducesthemodellingandestimationapproach.Thefollowing
section discusses the cost structure of Pannonia Ethanol and explains methodology. The final
sectionsummarizesthesimulationresults.Intheappendices,weoutlinetheappliedCGEmodel
inmoredetailandlistthetablesofthethreedifferentsimulationscenariosthatwererun:the
BaseScenario,theInvestmentScenarioandtheFarmerScenario.
Approach
TheimpactofPannoniaEthanolontheHungarianeconomyisestimatedusingamixedapproach.
Theoverallimpactisdisaggregatedintodirectimpactsandindirectimpacts.Directimpactscome
fromPannoniaEthanol'semployees,valueadded,export,andtaxpayments.Indirectimpacts,by
definition,arethesumofallotherimpactsthatPannoniaEthanolhasontherestoftheeconomy.
Namely, Pannonia Ethanol buys maize from farmers to produce ethanol. Also, other material
inputsareneededforproduction,likeenergy,chemicals,logisticservicesandbusinessservices.
WeassumethatwithouttheexistenceofPannoniaEthanolthisdemandwouldnotexisteither.
Theindirecteffectincludestheincrementalincome(valueadded),employment,taxpayments,
etc.ofallthosewhosupplymaterialinputstoPannoniaEthanol,andofsupplierstothesuppliers,
etc. The indirect effects are the sum of all such impacts cascading through the input-output
linkagesoftheeconomy.
The indirect impacts are estimated from a numerical simulation. We applied a calibrated CGE
modelfortheHungarianeconomyfortheperiod2010-2020.Withinthisperiod,2010-2015has
been calibrated to the observed macroeconomic facts (the known main macroeconomic
aggregates).The2016-2020periodiscalledtheprojectionperiod,whenboththeproductionof
PannoniaEthanolandtheoverallperformanceoftheHungarianeconomyisassumed.Thedetails
oftheCGEmodelandtheassumptionsmadearesummarizedinAppendix1.
However, we wish to add a short introduction of CGE models here. The acronym is for the
ComputableGeneralEquilibriummodels,whicharebasedongeneralassumptionsusedforpolicy
simulations.InaCGEmodel,households,firms,andgovernmentsarethedomesticparticipantsof
the economy, whose behavior is described using standard solutions from microeconomics. We
assume that households maximize their utility given their budget constraints, and wish to
consumeasmuchasispossible.Thefirmsuselabor,capitalandmaterialinputsforproduction.
Governmentsbuyproductsfromfirms,giveincometransferstohouseholdsandcollecttaxes.The
transactionswiththerestoftheworldaremainlypureexchangesofproducts,andweassume
thatdomesticandforeigngoodsarenotperfectsubstitutestoeachother.Thedecisionsofthe
participants(especiallyofhouseholdsandfirms),namelydecisionsonconsumption,production,
exportandimportaremainlydrivenbypricedifferentials.Thedecisionmakersintheeconomy
takepricesasgiven;theydonottakeintoaccounttheirowninfluenceonthedeterminationof
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
prices(assumptionofpricetakers).Wheneveraneventleadstoachangeinapriceofaparticular
good,householdsandfirmstrytosubstitutethatgoodwithacheaperone.Thissubstitutioneffect
isquitestrong,muchoftheadjustmentprocessisdrivenbypricechanges.
TheindirectimpactsofPannoniaEthanolcomefromthreedifferentsources.
1. The factory itself was built in 2010–2011, and has seen increasing production from
investmentseveryyear.Theaggregateinvestmentis165m€,whichhasbeenpaidfrom
2010to2015gradually.Approximatelyhalfofthissumwenttotheconstructionindustry;
the other half went to buying equipment, machines, and production facilities. In the
simulationwecallthispartofthedemandshockthe’investmentcomponent’.
2. Productionofethanolstartedin2012withcontinuouslyincreasingcapacity.Itstillhas
notreacheditsfulllevelofcapacitybutassumedtoreachitby2016(meaningthat2017
aggregateproductionwillneverthelessbemateriallyhigherthanfor2016).Production
requires a large amount of material inputs, of which the most important is maize. The
shareofmaizeinthetotalcostsofmaterialinputsvariesbetween60-80%,whichshows
theimportanceofthisinput.Inadditiontomaize,energyandchemicalsarealsoneeded
forproduction.Logisticservicesandotherbusinessservicesareusedtomarketethanol
andanimalfeed.Thiscomponentiscalledinthesimulationthe’productioncomponent’.
3. EmployeesofPannoniaEthanolliveinHungary.Thereforethenon-savedpartoftheir
incomeincreasesdemandforconsumptiongoods.Thisincomeeffectistakenintoaccount
asanapproximation:weassumethatthetotalsumofnetwagesincreasesthedemandfor
consumption.Thisadditionaldemandcomponentiscalledinthesimulationthe’income
component’.
TheindirecteffectsofPannoniaEthanolarethesumoftheinvestmentcomponent,theproduction
componentandtheincomecomponent.TheirvalueisestimatedusingaCGEmodel.Howeveras
CGEmodelsarehighlynonlinear,wemadefourdifferentsimulations:oneforeachcomponent,
andafinalsimulationwhenallthreecomponentswerepresentatthesametime.Usingthesefour
simulationswecandisaggregatetheimpactintorelevantparts.Nonetheless,thetotalimpactof
PannoniaEthanolontheHungarianeconomyisjustthesumofthedirectandindirectimpacts.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
BioethanolProductionatPannoniaEthanol
CGE models are powerful and useful tools when inter-sectoral linkages play a crucial role in
adjustmentmechanisms.Theimpactestimatedbythesetypesofmodelsisalwaysadifference
between a business-as-usual scenario and a counterfactual scenario. The business-as-usual
scenarioiscalculatedassumingthatthereisnointervention,whilethecounterfactualscenariois
calculatedassumingthatsomeparametersofthemodelhavebeenchanged.Tounderstandhow
asinglefactorycaninfluenceawholeeconomy,weneedtofindawayhowtointerpretthisidea
inthemodellingframework.
The key issue is the „representative firm” idea of CGE models. In these models, each sector is
representedbyasinglefirmwhichcanbeconsideredasanaverageofexisting,realfirmsin a
givenindustry.Ingeneral,therearedifferentwaystointroduceanewfactoryintoaCGEmodel.
Withoutgoingtoomuchintothedetails,weoutlineherethepossibleapproaches.
1. Wecanaddthenewfirmtoanexistingbranchoftheeconomybyassumingthatitbehaves
thesamewayasanaveragefirminthesamebranch.Inthiscase,forexamplebyshocking
the productive capital of the industry, we can simulate the impact of a new producing
plant.However,inthiscaseweneedtoarguethatthegivenfirmissimilarenoughtothe
averagefirmintheindustry;otherwisetheresultscan'tbeexplainedwell.
2. Wecancreateaseparateindustryforthegivenfirm.Inthiscaseitispossibletosimulate
thegeneralequilibriumeffectonoutput,employmentandincomeifthereisachangein
thelevelofproductionofthegivenfirm.However,inthiscasethereisnowaytosimulate
thecounterfactualthatisneeded tounderstandhow the economy would have evolved
withouttheexistenceofthegivenfirm.
3. Finally,ifafirmissimpleenoughthatithasonlyafewindustrialrelationships,thenwe
canarguereasonablythatinput-outputlinkagesarenottoodeep,andwecanavoidfitting
thegivenfirmintotheinput-outputstructureoftheeconomyandsimplyassumethatits
materialinputaddsanextrademandtotheeconomy.Thisisareasonableapproachifa
firm's products are mainly sold abroad, since in that case we can avoid complications
arisingfromaneedtomodeldomesticsales.
Each approach has its advantages and disadvantages. As for the first solution, it suits the CGE
frameworkmostnaturally;howeverinthiscasewewouldneedtobeconfidentthatthefirmbeing
researched is similar enough to the average industrial firm. The second approach is also very
sound,butitdoesnotallowananswertothegivenresearchquestion.Therefore,itiscrucialto
seehowsimilarordifferentthecoststructureofPannoniaEthanolistootherindustrialaverages.
Theproductionofbio-ethanolrequiresmaize,aninputmaterialthatconstitutesmorethanhalfof
Pannonia Ethanol's material costs. Other main cost elements are energy (natural gas and
electricity)anddifferentkindsofchemicals.Themarketingofbio-ethanolrequirestheusageof
logisticsandbusinessservices.Themostimportantfeatureofthisproductiontechnologyisthat
itisverymuchdifferentfromtheaveragemanufacturingfirminHungary,evenfromtheaverage
chemicalsfirm.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Bioethanol production, in the standard classification of activities (NACE rev. 2), belongs to the
„20.14Manufactureofotherorganicbasicchemicals”category.Thedataoninput-outputlinkages
howeverisnotavailableinsuchadeepdisaggregation,butweknowhowthe„20–Manufacture
ofchemicalsandchemicalproducts”and„C–Manufacturing”industries’coststructurelookslike.
Thisinformationissummarizedinthefollowingtable.Therearematerialdivergencesinalmost
allentries.However,fromourpointofview,themostimportantissueisthatanaveragefirmin
the „Chemicals” industry does not use inputs from agriculture, and even an average firm in the
Manufacturingindustryspendslessthan5%ofitsmaterialinputcostsonagriculturalinputs.On
the other hand, there is basically no other input for Pannonia Ethanol from the Manufacturing
industryotherthenchemicals,whereasforanaverageManufacturingfirmmorethantwo-thirds
ofitsinputisspentinthissector.EvenanaveragefirmintheChemicalsindustrybuysinputstoa
largeextentfromtheManufacturingindustry.
Table1.CoststructuresofaverageManufacturingfirm(NACERev.2.„C”),anaverageChemicalsfirm(NaceRev.
2.„20”),andPannoniaEthanol(%)
Organicbasic
Manufacturing
Chemicals
chemicals
PannoniaEthanol
C
20
20.14
-
agriculture
4.45
0
n.a.
60.47
manufacturing
69.73
48.17
n.a.
0
chemistry
5.92
26.41
n.a.
8.10
energy
2.70
8.94
n.a.
12.98
water
0.60
0.76
n.a.
0
construction
0.13
0.10
n.a.
0
trade
4.08
5.79
n.a.
0
logistics
2.44
2.83
n.a.
5.83
services
9.54
6.57
n.a.
12.61
publicservices
0.42
0.43
n.a.
0
totalinputs
100.00
100.00
n.a.
100.00
Additionalstatistics:
exportshare
65.52
70.05
n.a.
90.80
laborshare
48.11
52.15
n.a.
15.45
Source:Input-outputtablefromtheNationalStatisticalOfficeofHungaryandPannoniaEthanolZrt.
Themainconclusionfromthiscomparisonisthatthefirsttwoapproachesoftheabovelistare
notapplicableforthecurrentresearch.Therefore,weassumeintheanalysisthatfollowsthatthe
costsofPannoniaEthanolrepresentadditionaldemandtocertainindustriesoftheeconomy.Our
simulation experiment will address how the overall employment, GDP and the sectoral
distributionofthesemeasureswillchangewhenextrademandappears.
ThevaluesoftheassumedextrademandaresummarizedinAppendix2.CGEmodeldetailsand
measurementissuesarediscussedinAppendix1.Below,weshowtheresultsofthesimulations.
Wegenerallyexpressresultsinmillionsofeuros(andnumbersofpersons,respectively),butin
certaincaseswealsoshowtherelativesizeoftheimpactsinordertogetabetterpictureofwhat
oursimulationsmean.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
BaseScenario:MacroeconomicImpacts
TheBaseScenarioshowsthatthepresenceofPannoniaEthanolinHungaryhasledtoanincrease
in overall employment, income and production. Both on the national level and on the sectoral
level, the indirect and direct impacts are positive and contributed to a relevant measure of
observedgrowthintheHungarianeconomybetween2010-2015.Fortheprojectionperiod,the
expectedimpactmayevenexceedtheimpactsalreadyevident.
TheoverallimpactofPannoniaEthanolonHungarianGDPbetween2010-2020sumsuptoover
1.2bn€,ofwhichapproximatelytwo-thirdsarisesfromindirectimpactsofthefactory.Detailed
resultscanbeseeninFigure1hereandTable6inAppendix2.Theseindirectimpactscomefrom
thevalueaddedofsuppliersthroughtheinput-outputlinkagesoftheHungarianeconomy,and
the suppliers of the suppliers, etc. The yearly impact varies depending on the extra demand
PannoniaEthanolcreates.Asproductionstartedonlyin2012,thereisnodirectimpactbefore
thatyear.Thedirectimpactfrom2012onwardsfollowstherampingupoftheproductionasit
hasgraduallyreacheditscurrentlevel.Itisassumedthatproductionwillreachitsfullcapacityin
2016anditdoesnotchangeintherestoftheprojectionperiod.
TheyearlyindirectimpactofPannoniaEthanolvariesbetween20m€to100m€,dependingon
thestructureoftheextrademand.Theyearsofconstructionshowalargerindirectimpactasthese
demandcomponentsaddressnon-tradablesectors.Thereforeweobservesmallercrowding-out
effectsinthoseyears.Fortheprojectionperiod,thedirectimpactofPannoniaEthanolisconstant,
67m€ayear;howeverindirectimpactsshowcontinuedsmallgrowth.Itmaybesurprisingthat
indirectimpactsincreaseeveniftheshockitselfdoesnotchangeinabsoluteterms(seeTable12
inAppendix2).ThisresultcanbeexplainedbythebasicgrowthpathoftheHungarianeconomy
that is programmed into the CGE model. It has been assumed that overall national investment
demand increases in this period, which leads to a small increase in the capital stock of the
economy.Thisresultsinslowgrowth.ThesimulationaimsatcalculatinghowthepathoftheGDP
changesifthereisadditionaldemandfromPannoniaEthanol,andevenifthisadditionaldemand
is the same in monetary terms, it creates a larger impact in a slowly increasing economy by
enlargingthemultiplicativeprocessesoftheinput-outputlinkages.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Figure1.GDPImpact(BaseScenario)
160
140
120
(m€)
100
80
60
40
20
0
2010
2011
2012
2013
Directimpact
2014
2015
2016
2017
2018
2019
2020
Indirectimpact
Theemploymenteffectshowsaverydifferentpicture,astheindirecteffectismuchlargerthan
thedirecteffect(seeFigure2hereandTable7ofAppendix2).Thisresultcomesfromthefact
thatPannoniaEthanol'stechnologyislesslaborintensivethanthatoftheaverageHungarianfirm.
Evenifwecompareittoanyindustrialaverage,muchlesslaborisemployedbyPannoniaEthanol
toachievethesamevalueadded.Therefore,PannoniaEthanol'sadditionaldemandhasalarge
impactonlocalemployment.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Figure2.EmploymentImpact(BaseScenario)
3500
3000
(persons)
2500
2000
1500
1000
500
0
2010
2011
2012
2013
Directimpact
2014
2015
2016
2017
2018
2019
Indirectimpact
Inmanycasesitiseasiertounderstandthesizeofanimpactifweexpressitinrelativeterms.
Table 2 shows relative measures for the shock and the impact as well. The extra demand this
factorygavetotheHungarianeconomyfrom2010onwardsreached0.18%ofGDPandisexpected
toincreasefurtherto0.2%by2020.Aswewillseebelow,alargepartofthisextrademandis
satisfied from increased imports and a decrease in exports, so local production increases are
muted.
However,therelativesizeoftheimpactvariesacrossyears.In2010and2011,theextrademand
increasedproductionandvalueaddedatthesameamountastheshockitself;wecansaythere
wasnocrowdingouteffectintheseyears.Astheconstructionandenlargementofthefactorywas
onlyfinishedin2015,from2010-2015asubstantialamountofthefactory'sextrademandwas
absorbedbynon-tradablesectors,atleasthalfoftheextrademandincreasedlocalproductionand
employment.Incontrast,fortheprojectionperiodweexpectthatabitlessthanhalfoftheextra
localdemandwillbesatisfiedfromincreasedlocalproduction;onaveragethe0.2%increasein
demand,thatPEstates,willincreasevalueaddedby0.08%andemploymentby0.03%.
Table2.SizeoftheImpact(BaseScenario,%)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
.023 .119 .118 .169 .172 .184 .214 .210 .207 .204 .201
DemandshocktoGDP
.023 .120 .049 .072 .094 .101 .082 .084 .085 .087 .089
ImpactonOutput
.022 .118 .045 .067 .091 .096 .076 .079 .080 .082 .085
ImpactonGDP
ImpactonEmployment .015 .080 .025 .031 .042 .045 .030 .031 .032 .033 .034
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table3quantifiesthesizeofthecrowding-outeffectforthesimulationyears.2Row1showsthe
additionalamountofdemandthatthefactorycreatesintheHungarianeconomy.Rows2-7show
the results from simulation of the economic changes due to this extra demand. As investment
demand is assumed to be exogenous, there is no simulated impact on overall investment. The
increaseinincomeleadstoanincreaseinconsumption.However,exportsdeclineandimports
increase;therefore,theoverallindirectimpactonGDPislessthanthetotalextrademandthat
PannoniaEthanolcreates.Butstill,theextrademandleadstojobcreationandincreasesvalue
addedoftheeconomy.
Table3:Crowding-OutEffect(m€)
2010 2012
2014
2016
2018
2020
Total
1.ExtrademandofPannoniaEthanol
Impacton
2.consumption
3.investment*
4.governmentexpenditure*
5.export
6.import
7.tradebalance
TotalindirectimpactonGDP(1.+2.+3.+4.+7.)
19.7 98.7 155.7 195.0 199.5 202.5 1685.1
6.6 13.6
32.2
30.5
36.5
43.5
327.6
0
0
0
0
0
0
0
2.5
5.5
14.8
12.9
14.4
16.6
134.5
3.4 -37.0 -42.9 -78.6 -71.4 -66.8 -516.9
12.6 43.1
77.0
90.4 101.6 110.4
856.6
-9.3 -80.2 -120.0 -169.0 -173.0 -177.2 -1373.5
19.5 37.5
82.7
69.3
77.3
85.3
773.8
Thereasonforthestrongcrowding-outeffectcomesfromthepriceadjustmentmechanismsthat
arepresentinthemodel.PannoniaEthanolincreasesoveralldemandwithintheeconomy.The
overallsizeofthisshockisabout0.2%yearly.Theincreaseinthedemandfordomesticgoods
makes them relatively more expensive compared to foreign counterparts, and therefore
producerswilldecreasetheirownsalesabroadandincreasetheirsalesathome.Importreactsin
just the opposite direction; consumption of foreign goods will increase as their relative price
decreases. The magnitude of these substitution effects is governed by substitution elasticity
parameters.3
2Foronlyevenyears,Table13inAppendix2showsthesimulationresultsforeveryyear.
3 It is important to note that the results are sensitive to the magnitude of the elasticity parameters, but
relativelystableforsmallchangesinthesevalues.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
BaseScenario:DisaggregationoftheIndirectEffect
TheindirectimpactsonGDPandemploymentcanbedisaggregatedintoproduction,investment
andincome,asexplainedabove.TheinvestmentcomponenthasthelargestimpactonbothGDP
andemployment,bothinabsolutevalueandalsorelativetothesizeoftheshock.Thisresultcan
beexplainedbythefactthathalfoftheinvestmentcomponentgoestotheconstructionsector,
whichisanon-tradableindustry.Thereforetheextrademandcanonlybemetbyacorresponding
increaseinlocalproduction.
Figure3.DisaggregationofGDPImpacts
120
100
(m€)
80
60
40
20
0
2010
2011
2012
2013
investment
2014
production
2015
2016
income
2017
2018
2019
2020
non-linearity
TheproductioncomponenthasarelativelysmallerimpactonbothGDPandemploymentthanthe
investmentcomponent.Thisismainlyrelatedtotheopennessoftheagriculturalsector.Within
the EU common market, domestic and foreign agricultural products are largely fungible.
Therefore,increasedlocaldemandcanstabilizedemandforlocallyproducedmaizebutdoesnot
reallycontributetotheoveralldemandthatlocalproducersface.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Figure4.DisaggregationofEmploymentImpact
3500
3000
(persons)
2500
2000
1500
1000
500
0
2010
2011
2012
investment
2013
2014
production
2015
income
2016
2017
non-linearity
2018
2019
2020
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
BaseScenario:SectoralDistributionoftheIndirectImpacts
Itseemsfromtheaforementionedsimulationresultsthatimpactshighlydependonwhichsector
or industry is affected. Output (local production), value added (income) and employment are
disparatelyimpacted.Table9,Table10andTable11inAppendix2summarizethesimulation
resultsfordifferentsegmentsoftheeconomy.
In 2010-2011, when the initial investment was made, a small sectoral restructuring occurred:
increased labor demand in the construction sector adversely impacted the labor intensive
agriculturalsector.Asbothconstructionandagriculturearelaborintensive,anasymmetricshock
to only one of these industries leads to a movement of workers from one industry to another.
However,thiscrowding-outeffectisweak,andinthiscasewemayreasonablyassumethatitis
theresultofthenonlinearityofthemodel.So,theperiodofinvestmentgenerallyincreasedthe
production,valueaddedandemploymentparametersofthemanufacturingsector.
From2012,whenproductionstartedatPannoniaEthanol,theimpactismoreevenlydistributed
acrosssectors.Agricultureandmanufacturingincreasedproductionwith11-23m€and50m€100m€, while value added increased similarly at about 5-25m€ yearly. For services, we also
foundamaterialincreaseinproductionandvalueaddedaswell.
The employment effect is the largest in the manufacturing industry in the years of the largest
constructionpayments.Thisresultcomesfromthefactthatconstructionisoneofthemostlabor
intensiveindustries.Apartfromtheinvestmentcomponent,theemploymenteffectissimilarin
totalmanufacturing(~300persons)andagriculture(~300persons).Thesenumbersincludeall
generalequilibriumeffects,andnotonlythechangesinemploymentofthesuppliersofPannonia
Ethanol,butalsoallchangesinemploymentinagivensectorduetoinput-outputlinkages.
Inordertobetterunderstandhowtheseadjustmentmechanismswork,wepreparedaseparate
impact table on the agricultural sector. Table 4 shows the change in demand for agricultural
products due to Pannonia Ethanol- the extent to which Pannonia Ethanol's maize purchases
changetheoverallproductionofthewholeagriculturalsector,aswellasexportandimport.The
lastrowofthetableshowsthechangeinproductionasapercentageofthechangeinsectoral
demand. Due to the openness of EU agricultural markets and the fungible nature of most
agricultural products, we calculate that 5% of the extra demand is met through increased local
productionintheagriculturalsector.4
4 It is important to emphasize that this increase in agricultural production can happen anywhere in the
verticalsupplychain,asthegeneralequilibriumapproach(andtheaggregatemodelofthewholeindustry)
makesitimpossibletoidentifyexactlywhichagriculturalproductswillbeproducedingreaterquantities.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table4.Crowding-outeffectinagriculturalproduction
Agriculture
2012
2013
2014
2015
2016
Newdemand
57.90
80.52
69.49
77.93
123.51 123.51 123.51 123.51 123.51
Changeinproduction
2.81
3.58
3.10
3.65
6.31
Changeinexport
-33.77 -46.31 -37.86 -42.05 -65.60 -62.87 -60.41 -58.65 -56.84
Changeinimport
21.02
30.42
28.68
32.40
51.78
54.61
57.18
59.05
61.01
Impactondomestic
production(%)
4.85
4.44
4.46
4.68
5.11
5.30
5.47
5.57
5.67
2017
6.55
2018
6.76
2019
6.88
2020
7.00
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
InvestmentScenario
BecausePannoniaEthanolexpandedconstantlyafteropeningin2012,actualsalesvolumesand
revenuesincreasedeveryyearaswell.Itisprojectedthatmaximumcapacitywillbereachedin
2016.Therefore,intheBaseScenarioweassumethatPannoniaEthanolwillworkatfullcapacity
intheyearsbetween2016and2020.Nonethelesscontinuousreinvestmentintothefactoryisalso
areasonablescenario.WeexaminebelowwhatwouldhappenifPannoniaEthanolcontinuedto
invest at historical levels, which would lead to additional demand in the construction and
machinery sectors. Also, as a result of this investment, the productive capacity of Pannonia
Ethanolwouldincreasefurther,whichwouldcreateadditionaldemandforsuppliers.Thissection
summarizestheresultofthisInvestmentScenario.
Productionincreasedata12.2%annualratebetween2012and2015.Forthattrendtocontinue
intheprojectionperiod(thatisbetween2016and2020),anaverageyearly14m€investment
wouldbeneeded.ThesimulationshowsthatthepotentialimpactonGDPandemploymentwould
be much larger in this case than in the Base Scenario. The detailed results are presented in
Appendix2,whereasthemainresultscanbesummarizedasfollows.
Figure5.GDPimpactinthecontinuousinvestmentscenario
300
250
(m€)
200
150
100
50
0
2010
2011
2012
2013
Directimpact
2014
2015
2016
Indirectimpact
2017
2018
2019
2020
AfurtherincreaseinPannoniaEthanol'sproductionlevelsintheprojectionperiodleadstoan
enlargement of both the direct and indirect GDP impacts. The difference between the Base
ScenarioandtheInvestmentScenariois314m€intotal,fromwhich90m€isdirectimpact.The
remaining 224m€ represents extra indirect impacts on GDP arising from both investment
activitiesandextraproduction.TheoverallimpactonGDPis25%largerthanintheBaseScenario.
Figure5,Figure6andFigure7graphthiscontinuousinvestmentscenario.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
The larger GDP impact is partly due to investment activities, which are responsible for about
120m€inextrageneratedincomebysupplierstoPannoniaEthanol.Theremaining104m€isthe
resultofproductionactivities,whichincomeisdistributedamongfarmers,suppliersofchemicals
andsellersofotherinputsneededbyPannoniaEthanol.
The employment effect shows a dramatic change in comparison with the Base Scenario. Extra
demandfromPannoniaEthanol'scontinuousinvestmentsincreasesemploymentatthelevelsof
suppliersofPannoniaEthanolandatthelevelofsuppliersofthosesuppliers,etc,Theimpactis
twiceasprofoundasintheBaseScenario.Thelargeimpactispartlydrivenbytheinvestment
component,whichincreasesdomesticproductiontoalargeextentduetotheimpactonanontradablesector.
Figure6.DisaggregationofIndirectGDPImpacts(InvestmentScenario)
180
160
140
(m€)
120
100
80
60
40
20
0
2010
2011
2012
2013
investment
2014
production
2015
2016
income
2017
2018
non-linearity
2019
2020
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Figure7.DisaggregationoftheIndirectEmploymentImpact(InvestmentScenario)
3500
3000
(persons)
2500
2000
1500
1000
500
0
2010
2011
2012
investment
2013
2014
2015
production
2016
income
2017
2018
2019
non-linearity
2020
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
FarmerScenario
The Base Scenario includes a relatively large crowding-out effect. Therefore, the simulated
impactsonGDPandemploymentaregenerallylowerthantheoriginalextrademand.Thislarge
crowding-outeffectisgenerallyrelatedtotheopennessofcertainsectors.Asthemaininputof
bioethanol production is maize, we made a hypothetical scenario concerning the agricultural
sector.Inthishypotheticalscenarioweaskhowdifferenttheimpactnumberswouldlookifthe
extraagriculturaldemandwascompletelysatisfiedfromdomesticsources.
However,suchanexperimentisnotwithoutmethodologicalchallenges.Closinganindustrythat
isopenoriginallymeansthatthebusiness-as-usualpathoftheeconomy,towhichwecompare
thecounterfactualpathwillbedifferentaswell.Anewbusiness-as-usualpathhasbeencalibrated
assuming that agriculture is closed (export and import of agriculture has been set to zero and
tradebalancehadbeenaddedtothehouseholdconsumption).Thisnewbasepathhasalower
GDPthanintheoriginalsimulation;therefore,theextrademandfromPannoniaEthanolhasnot
been added in absolute terms but rather as a percentage of the simulated GDP. This way the
relativesizeoftheshocksinthedifferentscenariosarecomparable.
Table5comparestheimpactondomesticagriculturalsupplyinallthreescenarios.Weseethatin
theBaseScenarioandtheInvestmentScenario,domesticsupplyexpansioncoversabout5%,of
additionaldemand,regardlessofwhetherthereisreinvestmentornot.Thisbasicallymeansthat
byenlargingtheproductivecapacityofPannoniaEthanoltheimpactonthedomesticagriculture
productionwillbelargeraswell,atleastinabsoluteterms.Butatthesametimeinbothscenarios
weseethatapproximately95%oftheincreasedextrademandissatisfiedfromforeignsources
(eitherbyimportingmoreorbyexportingless).
The simulation results show a very different picture in the Farmer Scenario. Assuming that
agricultureisclosed,theextrademandofPannoniaEthanolformaizewillleadtoalargeincrease
indomesticproduction:approximately70%oftheextrademandwillbemetbyaparallelincrease
indomesticproduction.Atthesametime,thegrowthoftheeconomywillleadtoanexpansionof
otherindustriesaswell,whichincreasesthedemandforagricultureproductsfurther.Asfarmers
reach the boundaries of the available primary factors of production (labor and capital,
respectively),theywillnotbeabletosatisfythisextrademandfully.Therefore,thehousehold
consumptionofagricultureproductswilldeclinetoalargeextent.However,incomparisonwith
theothertwoscenarios,themaindifferenceisintheresponseoffarmers,whoproducemore.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table5.FarmerProductivityinDifferentScenarios
BaseScenario
Newdemand
Changeinproduction
Changeinexport
Changeinimport
Impactondomestic
production(%)
InvestmentScenario
Newdemand
Changeinproduction
Changeinexport
Changeinimport
Impactondomestic
production(%)
FarmerScenario
Newdemand
Changeinproduction
Changeinfinaldemand
(households)
Changeinintermediate
consumptionof
agriculturalproducts
Impactondomestic
production(%)
2012
2013
2014
2015
2016
2017
2018
2019
2020
57.90 80.52 69.49 77.93 123.51 123.51 123.51 123.51 123.51
2.81
3.58
3.10
3.65
6.31
6.55
6.76
6.88
7.00
-33.77 -46.31 -37.86 -42.05 -65.60 -62.87 -60.41 -58.65 -56.84
21.02 30.42 28.68 32.40 51.78 54.61 57.18 59.05 61.01
4.85
4.44
4.46
4.68
5.11
5.30
5.47
5.57
5.67
57,90 80,52 69,49 77,93 123,51 139,49 157,54 177,93 200,95
2,81
3,58
3,10
3,65
6,31
7,42
8,68 10,02 11,57
-33,77 -46,31 -37,86 -42,05 -65,60 -70,81 -76,57 -83,59 -91,01
21,02 30,42 28,68 32,40 51,78 61,86 73,37 85,86 100,54
4,85
4,44
4,46
4,68
5,11
5,32
5,51
5,63
5,76
58,14
41,77
81,06
58,15
70,38
50,79
12,97
18,08
15,87
17,72
27,92
31,67
35,91
40,62
45,98
71,84
71,73
72,16
71,58
71,59
71,84
72,09
72,22
72,37
78,97 125,16 141,35 159,65 180,31 203,64
56,52 89,60 101,54 115,09 130,22 147,38
-29,34 -40,99 -35,46 -40,17 -63,48 -71,48 -80,47 -90,71 102,24
Notsurprisingly,GDPandemploymentimpactsarehigherintheFarmerScenario.Detailedresults
tablesoftheFarmerScenarioarepresentedinAppendix2.IndirectGDPimpactsaremorethan
three times larger than in the Investment Scenario (see Figure 8). The indirect employment
impact in 2020 is about 11240 persons, in contrast to the 2509 persons of the Investment
Scenario.Thisismorethanfourtimeslarger,whichisreallyremarkable.
Thelargeemploymenteffectismainlyexplainedbythelaborintensityofthedomesticagriculture
industry.Asthemaininputofbioethanolismaize,ofwhichproductionismoreautomatizedthan
an average agriculture product, the relevant labor intensity would be lower. Therefore, the
abovementionedemploymentimpactcanbeinterpretedasahighestimation.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Figure8.DisaggregationofIndirectGDPImpacts(FarmerScenario)
800
700
600
(m€)
500
400
300
200
100
0
2010
2011
2012
2013
investment
2014
2015
production
2016
2017
income
2018
2019
2020
non-linearity
Figure9.DisaggregationofEmploymentImpacts(FarmerScenario)
12000
10000
8000
6000
4000
2000
0
2010
2011
2012
2013
investment
2014
2015
production
2016
2017
income
2018
2019
non-linearity
2020
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Appendix1.Hétfa-CGEmodeloftheHungarianEconomy
WeapplyadynamicCGEmodeltoestimatingtheimpactofPannoniaEthanolontheHungarian
economy.Thecoreofthemodelisastandard,staticCGEmodelwhichhasbeenmodifiedforthe
purposeofthisanalysisinthefollowingaspects:
1. Firmsutilizethreeprimaryfactorsinproduction,namelyskilledandunskilledlaborand
capital.However,unlikeinastandardCGEmodel,inourapplicationcapitalisnotmobile
acrosssectors.Capitalisgivenbypastinvestmentanddepreciationineachsector,only
thelaborinputisfreetoadjusttotheshocks.
2. Themarketforskilledlaborismodelledfollowingefficiencywagetheories,whichmakeit
possibletosimulatetheimpacton(involuntary)unemployment,aswell.Themarketfor
unskilledworkersismodelledbyassumingminimum(real)wages.
3. Recursivedynamicshavebeenaddedtofollowhowinvestmentdecisionsinfluencethe
pathofcapital.
Finally,10sectors(andtherefore10products)havebeendistinguishedbytheapplication,these
are(1)agriculture,(2)manufacturing,(3)chemistry,(4)energy,(5)water,(6)construction,(7)
trade,(8)logistics,(9)servicesand(10)publicservices.Construction,waterandpublicservices
arenon-tradable,theotherindustriesaretradable.
ThecoreCGEmodel
ThecoreoftheCGEmodelisasetofstaticequationsdescribingthebehavioroftheagents,namely
theirdecisionsaboutconsumingorproducinggoodsandservices.Asaresultoftheirdecisions,
theflowsarecompletelydeterminedandinfluencethetimepathofthestockvariablesasitis
showninthesectionondynamics.
Householdbehavior
Therepresentativehouseholdsharesitsincomebetweensavingsandconsumption.Theprimary
incomeofthehouseholdequalstheincomegeneratedinproduction,sincethehouseholdisthe
onlyowneroffactorsofproduction.Itpaystaxontheincomeofprimaryfactorsofproduction,
andfurthermore,itreceivesatransferfromthegovernment.InthestaticCGEframeworksavings
areexogenous;however,inourapplicationthesavingsrateisdrivenbythepastrealinterestrate.
Disposablehouseholdincomeisthereforegivenasthedifferenceofprimaryincomeandsavings,
transfersandtaxes.Weassumethatlaborsupplyisgivenbythevalueoftheinitialyear.Therefore,
householddecisionsfocusonthebasketstructureofconsumption.Theutilitylevelofaggregate
consumptionisaCESaggregateofallgoods.
Productionblock
Therelationshipsbetweenfactorsofproductionandthegoodsproducedfollowthestructureof
standard CGE models. Therefore, the products of different sectors are used for intermediate
inputsandforfinaluse,aswell.ThestructureoftherelationshipsisshowninFigure10.
1. First,primaryfactorsofproduction(capital,skilledandunskilledlabor)areaggregatedto
acompositefactorofproductionusingtheCobb-Douglasproductionfunction.Thus,the
elasticityofsubstitutionbetweenlaborandcapitalisassumedtobeunity.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
2. Thedomesticsupplyofgoodsisproducedusingthecompositefactorandintermediate
inputsforproduction.WeassumeLeontieftechnologyatthislevel.Therefore,boththe
compositefactorandtheintermediateinputsareusedinfixedsharesintheproductionof
goods.
3. Domesticoutputissoldbothathomeandabroad.Theusualtransformationfunctionis
used to split domestic production between domestic sales and exports. The
transformationfunctionutilizesthepricedifferencesbetweendomesticsalesandforeign
sales,anditassumesfinalelasticityofsubstitution,thusavoidingperfectspecialization.
4. Thegoodsfinallyconsumedareeitherproduceddomesticallyorimported.Goodsforfinal
useareaggregatedbyArmington’saggregationfunctionsfromdomesticgoodsandimport
goods. This method is similar to the transformation function approach: by introducing
final price elasticities, domestic and foreign goods are considered as not perfect
substitutestoeachother.
5. Thecompositionofdomesticdemandisthefollowing:privateconsumption,government
expenditure,investmentdemandandintermediateinputs.
Technically,theproductiondecisionismodelledinanestedstructure.Firmstakethepricesof
inputsandthepricesoftheirproductsasgivenateverydecisionlevel.Atthefirstlevel,firmsuse
primaryfactorsofproduction(laborandcapital)toobtainthecompositefactor.Thetechnology
ofproductionisdescribedbyaCESproductionfunction.Thedemandofthedifferentsectorsfor
primaryinputscanbederivedfromtheprofitmaximizationofthefirms.Atthesecondlevel,firms
producetheirgoodsfromthecompositefactorofproductionandintermediateinputs.Atthislevel
aggregation is modelled by Leontief technology, assuming that the composite factor and the
intermediateinputsareusedatfixedratiosinproduction.Thedemandfunctionoffactorsandthe
supplyfunctionofproductsarederivedfromtheprofitmaximizationdecisions.
Figure10.Productionanduseofgoodsintradableindustries
Itisassumedthattheamountofcapitalisgivenbypastdecisionsoninvestmentanddepreciation
(however,thewholeprocessiscompletelyexogenous).Therefore,thereisnomarketforcapital
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
inthemodel.Theincomeshareofthecapitalismodelledasgrossoperatingprofitandisgivento
thehouseholds,itformspartoftheirprimaryincome.
Foreign trade is modelled assuming that Hungary is a small, open economy. Therefore, by
assumption the world price of export and import goods are exogenous and given in foreign
currency.Theforeignsavingsisalsoexpressedinforeigncurrency.
Goods produced domestically and imported goods are not perfect substitutes; therefore, it is
important to define composite goods that express the relationship between domestic and
importedgoods.Therefore,fortradablegoods,theso-calledArmingtonaggregationfunctionsare
used,whereaparametershowsthesubstitutabilityofforeignanddomesticgoods.Fromthese
functionsdemandfordomesticandimportedgoodscanbederived.
Domesticgoodsareeitherconsumedinthecountryorareexported.Thesetwotypesofuseare
expressed by a transformation aggregation function where the elasticity of substitution is
describedbyaparameter.Thedomesticsupplyandthesupplyforexportscanbederivedfrom
thisfunction.
Government
Government income is determined endogenously, while the real expenditures are exogenous.
Governmentincomecomesfromtwoparts:indirecttaxesstemmingfromtheuseofproductsand
direct taxes levied on the primary factors of production. Expenditures of the government are
governmentalconsumptionandtransferspaidtohouseholds.Theprimarybalanceofthebudget
isthedifferenceoftheincomesandexpenditures,whchisexpressedasapercentageofGDP.
Labormarket
InstandardCGEmodelslabormarketsandothermarketsclearduetotheadjustmentofthereal
wage,andthusunemploymentoccursonlyvoluntarily.However,inthelastdecadesseveralways
ofmodellinglabormarketrigiditieswereimplementedintheCGEframework;foranexcellent
summary of these methods see Boeters & Savard (2012). In the present model, labor market
rigiditiesareintroducedfollowingefficientwagetheory.
Intheefficientwagemodel,theequilibriumwageisdeterminedastheintersectionofthelabor
demandcurveandthewagecurve.Sincethiswagelevelisnotnecessarilytheonewherelabor
supply and demand are equal, there is an oversupply of labor in the market; thus, there is
unemployment. The wage curve is the result of an incentive situation stemming from the
informationasymmetrybetweenemployersandemployees.Thefirmwantstodetermineawage
atwhichworkersareincentivizedtoworkhard;therefore,theutilitiesofworkersfromworking
must be at least the utility from shirking. The parameterization of the labor market follows
Boeters&Savard(2012).
Forunskilledlabor,weassumethatthereisaspecialformofwagerigidityonthemarket.Thereal
wageofunskilledlaborcannotgobelowtheinitiallevel.Astherehasbeenaremarkableincrease
inthe(nominalvalueofthe)minimumwageinHungarybetween2010and2015,wecalculated
theactualincreaseintherealvalueoftheminimumwage.Itisassumedthattheemploymentof
unskilledlaboriscompletelydeterminedbythedemandforunskilledlaboraslongasthereis
unemploymentandtherealwageremainsattheminimumlevel.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Marketequilibrium
Asthepresentmodelhasageneralequilibriumframework,equilibriummustholdinallmarkets;
therefore,totalconsumptionofeverytradablegoodmustbeequaltothesumofthesuppliesof
theimportanddomesticproduction.Asfornon-tradablegoods,domesticsupplymustequalto
domesticdemand.Thetradebalanceandthebalanceofthecapitalaccountadduptodetermine
savingsoftherestoftheworld.Theinvestment-savingsbalanceholdsasdomesticinvestmentcan
onlybefinancedfromdomesticsavingsandforeignsavings.
Equilibriummustholdinthemarketofproductionfactors,aswell.However,inthelabormarket
it means that the difference between labor demand (as is defined by the sum of sectoral labor
demand) and the labor supply (from household utility maximization) defines unemployment.
However,thisunemploymentratemustbeconsistentwiththewagespecifiedbythewagecurve.
Closurerule
ThemacroeconomicaggregatesofastaticCGEmodelarenotfullydetermined.Asitisusualin
this modelling environment, a so-called “closure rule” is applied. The closure rule entails
identifying which macroeconomic variable is considered as being exogenous in order to fully
specify the macro level of the model. In our application, the investment-driven closure rule is
applied.Weassumethatthemodelsimulationsaimatmeasuringtheimpactofashort-runevent
withouthavinganysignificantimpactonfutureplans,includinginvestment.Therefore,(sectoral)
investmentdemandsaretakenasexogenous.
Thenumeraireistherealexchangerate.Byusingthisusualsmallcountryassumptionwesuppose
thattheshockhasnooverallimpactontherealexchangerate.Moreover,byassumingexogenous
worldpricesfortheexportandimportgoods,thepricesofforeigngoodsindomesticcurrencyis
completelyexogenous.Thisassumptionmeansthatthesupplyofforeigngoodsisfullyflexible
andgiveninanyamountatanydomesticprices.
Dynamics
Thecharacteristicsofthesystemdescribedabovedeterminethestaticequilibriumofthemodel.
However,fordescribingthetimepathoftheeconomy,dynamicsshouldbeadded.Dynamicsofa
model can either be forward-looking or backward-looking. In the present model recursive
dynamicrelationshipsareused;therefore,pastandpresentvaluesdeterminetheinitialvaluesof
thenextperiod.
Theserecursiverelationshipsarethefollowing:(1)capitalstockincreaseswithinvestmentsand
decreases due to depreciation. (2) Net foreign debt of the country is the debt of the previous
periodincreasedbypayableinterestsanddecreasedbyredemption,whichisexpressedbythe
balanceoftradeofthecountry.Realinterestratesaredeterminedbytheforeignrealinterestrate.
Riskpremiumrelatedtothedebtofthecountryisanonlinearfunctionoftheindebtednessofthe
country,andismodelledbyasocalledlinexfunctionthatpunisheshighindebtednessstrongly.
Thehouseholdsavingsrateisexogenous;however,itmaychangeintimeduetothechangesin
therealinterestrate.Inthismodelitisassumedthatthelaggedvalueoftherealinterestrate
affectsthehouseholdsavingsrate.
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Appendix2.Tables.
A2.1Basescenario
Table6.GDPImpact(m€)
Direct
impact
Indirect
impact
Total
impact
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0
Total
0
9.7
18.3
12.7
38.5
66.9
66.9
66.9
66.9
66.9
413.6
19.5 101.6
37.5
57.4
82.7
88.5
69.3
73.8
77.3
80.9
85.3
773.8
19.5 101.6
47.2
75.7
95.4 126.9 136.2 140.7 144.2 147.8 152.2
1187.4
Table7.EmploymentImpact(persons)
Directimpact
Indirectimpact
Totalimpact
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1
8
94
103 112
147
147
147
147 147 147
572 2954
866 1061 1489 1590 1067 1122 1165 1209 1268
573 2962
960 1164 1601 1737 1214 1269 1312 1356 1415
Table8.BudgetImpact(m€)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
0.03 0.26 2.23 2.98 2.58 5.69 7.53 7.53 7.53 7.53 7.53 51.42
Directimpact
Indirectimpact 6.33 33.03 9.27 12.01 17.84 19.21 11.78 12.63 13.31 13.68 14.21 163.29
6.35 33.29 11.50 14.99 20.42 24.90 19.31 20.16 20.84 21.21 21.74 214.72
Totalimpact
Table9.OutputImpact(m€)
agriculture
manufacturing
services
trade
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-0.3 -1.3 9.3 13.0 11.4 13.0 21.7 22.3 22.8 23.1
31.3 164.1 50.2 62.5 90.6 103.7 63.2 66.8 69.6 72.2
6.9 35.0 18.9 42.9 58.8 57.5 55.4 58.4 60.7 63.5
2.5 12.9 4.7 7.2 10.4 11.5 9.1 10.0 10.7 11.4
2020
23.5
75.5
66.9
12.3
Total
158.5
849.7
524.9
102.8
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table10.ValueAddedImpact(m€)
Incomebysector
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
agriculture
-0.4
manufacturing
10.8 56.7 15.3 16.2 26.4 30.4 14.8 15.7 16.4 17.0 17.8 237.6
services
3.7
18.5 8.9
22.9 33.0 32.2 30.0 32.2 33.9 35.8 38.2 289.3
trade
1.1
5.9
2.4
-2.3
5.5
1.7
7.5
6.2
3.9
7.2
4.6
13.2 13.6 13.9 14.1 14.3 92.8
3.0
3.5
3.9
4.3
4.8
39.2
Table11.SectorEmploymentImpact(persons)
Employmentbysector
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
agriculture
-17
-86
134
176
132
150
297
303
309
311
313
manufacturing
589
3059 624
492
892
1049 262
283
298
313
335
services
-36
-199 74
371
420
325
487
501
513
528
549
trade
35
181
21
44
66
22
34
45
56
70
35
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table12.SectorAdditionalDemand,simulationparameters
2010
Investmentdemand(m€)
Construction
Manufacturing
Intermediatematerialsforproduction(m€)
Agriculture
Chemistry
Energy
Logistics
Additionaldemandfromsalaries(m€)
Totaldemandshock(m€)
as%ofGDP
2011
7.6
7.6
2012
39.6
39.6
2013
7.4
7.4
2015
3.7
3.7
0
0 57.9
0
0
2.1
0
0 11.0
0
0
4.6
0
0
1.2
15.1 79.3 91.6
0.023 0.119 0.118
2014
8.5
8.5
80.5
9.3
16.0
7.2
1.3
121.6
0.169
2017
9.6
9.6
69.5
8.0
15.8
7.2
1.4
118.8
0.172
2016
0
0
77.9
11.7
15.9
7.1
2.0
133.8
0.184
2018
0
0
123.5
6.7
23.7
10.1
2.5
166.5
0.214
2020
0
0
123.5
6.7
23.7
10.1
2.5
166.5
0.207
Total
0
0
123.5
6.7
23.7
10.1
2.5
166.5
0.210
2019
0
0
76.34
76.34
123.5
6.7
23.7
10.1
2.5
166.5
0.204
123.5
903.4
6.7
64.7
23.7
177.2
10.1
76.5
2.5
18.2
166.5 1392.7
0.201 Table13.CrowdingOutEffect(m€)
Crowdingouteffect
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
1. Extra demand of Pannonia
Ethanol
19.7
102.5
98.7
144.6
155.7
168.6
195.0
197.4
199.5
200.9
202.5
1685.1
Impacton
2.consumption
3.investment
4.governmentexpenditure
5.export
6.import
7.tradebalance(5.-6.)
TotalindirectimpactonGDP
(1.+2.+3.+4.+7.)
2010
6.6
0
2.5
3.4
12.6
-9.3
34.1
0
13.1
17.6
65.7
-48.2
13.6
0
5.5
-37.0
43.1
-80.2
22.7
0
9.7
-54.0
65.7
-119.7
32.2
0
14.8
-42.9
77.0
-120.0
34.7
0
15.9
-43.2
87.6
-130.8
30.5
0
12.9
-78.6
90.4
-169.0
33.9
0
13.7
-74.7
96.5
-171.2
36.5
0
14.4
-71.4
101.6
-173.0
39.5
0
15.3
-69.2
105.7
-174.9
43.5
0
16.6
-66.8
110.4
-177.2
327.6
0
134.5
-516.9
856.6
-1373.5
19.5
101.6
37.5
57.4
82.7
88.5
69.3
73.8
77.3
80.9
85.3
773.8
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
A2.2InvestmentScenario
Table14.GDPImpact(m€)
Direct
impact
Indirect
impact
Total
impact
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0
74.8
83.7
Total
0
9.7
18.3
12.7
38.5
66.9
93.8 105.2
503.5
19.5 101.6
37.5
57.4
82.7
88.5
91.6 105.7 120.5 136.8 156.4
998.3
19.5 101.6
47.2
75.7
95.4 126.9 158.5 180.5 204.2 230.6 261.6
1501.8
Table15.EmploymentImpact(persons)
Directimpact
Indirectimpact
Totalimpact
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1
8
94
103 112
147
147
147
147 147 147
572 2954
866 1061 1489 1590 1586 1789 2002 2231 2509
573 2962
960 1164 1601 1737 1733 1936 2149 2378 2656
Table16.BudgetImpact(m€)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
Directimpact
0.03 0.26 2.23 2.98 2.58 5.69 7.53 8.13 8.80 9.56 10.41 58.19
Indirectimpact 6.33 33.03 9.27 12.01 17.84 19.21 18.42 20.96 23.61 25.97 28.77 215.41
Totalimpact
6.35 33.29 11.50 14.99 20.42 24.90 25.95 29.09 32.41 35.52 39.18 273.61
Table17.OutputImpact(m€)
agriculture
manufacturing
services
trade
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
-0.3 -1.3 9.3 13.0 11.4 13.0 21.4 25.0 28.9 33.3 38.2 191.9
31.3 164.1 50.2 62.5 90.6 103.7 96.6 109.2 122.2 135.9 152.2 1118.4
6.9 35.0 18.9 42.9 58.8 57.5 63.3 73.4 84.1 96.6 111.6 649.1
2.5 12.9 4.7 7.2 10.4 11.5 11.9 13.9 16.1 18.4 21.3 130.7
Total
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table18.ValueAddedImpact(m€)
Incomebysector
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
agriculture
-0.4
manufacturing
10.8 56.7 15.3 16.2 26.4 30.4 27.1 30.4 33.6 36.9 40.8 324.7
services
3.7
18.5 8.9
22.9 33.0 32.2 34.5 40.6 47.0 54.5 63.6 359.5
trade
1.1
5.9
2.4
-2.3
5.5
1.7
7.5
6.2
3.9
7.2
4.6
12.7 14.9 17.4 20.1 23.2 112.2
4.4
5.3
6.2
7.2
8.4
51.1
Table19.SectorEmploymentImpact(persons)
Employmentbysector
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
agriculture
-17
-86
134
176
132
150
282
329
382
440
manufacturing
589
3059 624
492
892
1049 816
887
955
1018 1095
services
-36
-199 74
371
420
325
437
508
587
680
794
trade
35
181
21
44
66
52
65
78
93
115
35
505
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table20.SectorAdditionalDemand,simulationparameters
2010
Investmentdemand(m€)
Construction
Manufacturing
Intermediatematerialsforproduction(m€)
Agriculture
Chemistry
Energy
Logistics
Additionaldemandfromsalaries(m€)
Totaldemandshock(m€)
as%ofGDP
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
7.6 39.6
7.4
3.7
8.5
9.6
7
7
7
7
7 111.66
7.6 39.6
7.4
3.7
8.5
9.6
7
7
7
7
7 111.66
0
0 57.9
80.5
69.5
77.9 123.5 139.5 157.5 177.9 201.0 1085.3
0
0
2.1
9.3
8.0
11.7
6.7
7.6
8.6
9.7
11.0
74.6
0
0 11.0
16.0
15.8
15.9
23.7
26.8
30.2
34.1
38.5
212.1
0
0
4.6
7.2
7.2
7.1
10.1
11.4
12.9
14.5
16.4
91.4
0
0
1.2
1.3
1.4
2.0
2.5
2.5
2.5
2.5
2.5
18.2
15.1 79.3 91.6 121.6 118.8 133.8 180.6 201.9 225.8 252.9 283.5 1704.9
0.023 0.119 0.118 0.169 0.172 0.184 0.237 0.260 0.286 0.316 0.348
Table21.CrowdingOutEffect(mu)
Crowdingouteffect
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
1. Extra demand of Pannonia
19.7
Ethanol
102.5
98.7
144.6
155.7
168.6
215.9
244.3
275.9
310.6
350.0
2086.6
Impacton
2.consumption
3.investment
4.governmentexpenditure
5.export
6.import
7.tradebalance(5.-6.)
TotalindirectimpactonGDP
(1.+2.+3.+4.+7.)
2010
6.6
0
2.5
3.4
12.6
-9.3
34.1
0
13.1
17.6
65.7
-48.2
13.6
0
5.5
-37.0
43.1
-80.2
22.7
0
9.7
-54.0
65.7
-119.7
32.2
0
14.8
-42.9
77.0
-120.0
34.7
0
15.9
-43.2
87.6
-130.8
38.1
0
16.1
-75.5
103.0
-178.6
45.3
0
18.7
-81.1
121.5
-202.6
52.5
0
21.4
-87.5
141.8
-229.3
60.9
0
24.9
-95.6
164.0
-259.5
71.5
0
29.2
-104.1
190.2
-294.2
412.0
0
172.0
-600.0
1072.3
-1672.3
19.5
101.6
37.5
57.4
82.7
88.5
91.6
105.7
120.5
136.8
156.4
998.3
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
A2.3FarmerScenario
Table22.GDPImpact(m€)
Direct
impact
Indirect
impact
Total
impact
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0
0
9.7
18.3
12.7
38.5
66.9
74.8
83.7
Total
93.8 105.2
503.5
21.1 111.5 133.0 198.8 227.8 253.4 347.3 415.8 493.2 577.7 679.0
3458.4
21.1 111.5 142.7 217.1 240.4 291.8 414.2 490.6 576.9 671.5 784.2
3961.9
Table23.EmploymentImpact(persons)
Directimpact
Indirectimpact
Totalimpact
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1
8
94 103
112 147 147
147 147
147
147
606 3171 2805 3780 4080 4446 6037 7111 8335 9656 11240
607 3179 2899 3883 4192 4593 6184 7258 8482 9803 11387
Table24.BudgetImpact(m€)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
Directimpact
0.03 0.26 2.23 2.98 2.58 5.69 7.53 8.13 8.80 9.56 10.41 58.19
Indirectimpact 6.42 33.93 14.39 19.65 26.26 28.64 33.38 40.23 47.99 54.51 62.30 367.71
Totalimpact
6.44 34.19 16.62 22.64 28.85 34.33 40.91 48.36 56.79 64.06 72.72 425.90
Table25.OutputImpact(m€)
agriculture
manufacturing
services
trade
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1.8 10.3 139.1 199.6 189.3 212.5 337.0 399.7 471.2 548.9 640.3 3149.7
32.2 171.4 105.2 146.0 181.1 206.7 253.9 302.8 357.4 414.5 482.9 2654.1
7.5 38.9 55.1 97.0 115.9 123.2 163.4 194.7 230.0 270.4 319.1 1615.2
2.7 14.3 18.1 26.8 30.3 34.3 47.2 56.5 67.1 78.7 92.5 468.5
Total
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table26.ValueAddedImpact(m€)
Incomebysector 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
127.
0
142.
6
227.
7
271.
1
320.
7
374.
5
438.
0
2135.
1
22.7
26.8
19.4
23.1
26.8
30.1
34.3
268.6
20.3 25.2 47.9
61.2
64.9
83.6
101.
3
121.
2
144.
2
172.
4
846.3
6.4
10.7
12.5
16.4
20.0
24.1
28.5
33.9
168.3
5.5
133.
93.3 9
agriculture
0.9
manufacturing
10.7 56.8 9.1
services
4.0
trade
1.2
5.9
8.8
8.7
Table27.SectorEmploymentImpact(persons)
Employmentbysector
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
agriculture
21
125
manufacturing
582
3042 120
-169 392
511
-109 -137 -181 -248 -306
services
-35
-193 131
433
477
387
515
607
721
862
1043
trade
38
196
203
217
258
345
410
486
571
678
2386 3312 2994 3290 5286 6231 7309 8470 9824
168
MacroeconomicimpactofPannoniaEthanolontheHungarianEconomy
Table28.SectorAdditionalDemand,simulationparameters
2010
Investmentdemand(m€)
Construction
Manufacturing
Intermediatematerialsforproduction(m€)
Agriculture
Chemistry
Energy
Logistics
Additionaldemandfromsalaries(m€)
Totaldemandshock(m€)
as%ofGDP
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
7.6 39.9
7.4
3.7
8.6
9.7
7
7
7
7
7 112.65
7.6 39.9
7.4
3.7
8.6
9.7
7
7
7
7
7 112.65
0
0 58.1
81.1
70.4
79.0 125.2 141.4 159.6 180.3 203.6 1098.6
0
0
2.1
9.3
8.1
11.9
6.8
7.7
8.7
9.8
11.1
75.5
0
0 11.1
16.2
16.0
16.1
24.0
27.1
30.6
34.6
39.1
214.7
0
0
4.7
7.2
7.2
7.2
10.2
11.6
13.1
14.7
16.6
92.5
0
0
1.2
1.3
1.5
2.0
2.5
2.5
2.5
2.5
2.5
18.5
15.1 79.7 92.0 122.4 120.3 135.6 183.0 204.6 228.9 256.3 287.3 1725.2
0.023 0.121 0.141 0.205 0.213 0.229 0.310 0.352 0.400 0.451 0.509
Table29.Crowding-outeffect(m€)
Crowdingouteffect
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
1. Extra demand of Pannonia
19.9
Ethanol
105.2
118.3
176.4
195.1
213.2
285.9
336.4
393.4
453.8
524.5
2822.1
Impacton
2.consumption
3.investment
4.governmentexpenditure
5.export
6.import
7.tradebalance(5.-6.)
TotalindirectimpactonGDP
(1.+2.+3.+4.+7.)
2010
7.6
0
2.7
3.4
12.6
-9.2
40.3
0
14.4
17.9
66.3
-48.4
66.7
0
16.9
-35.5
33.4
-68.9
99.9
0
27.6
-51.9
53.4
-105.2
109.5
0
34.9
-41.7
70.0
-111.8
122.7
0
39.3
-41.6
80.3
-121.9
175.7
0
50.9
-77.1
88.2
-165.2
210.8
0
61.1
-86.4
106.0
-192.4
251.0
0
72.3
-97.8
125.7
-223.6
295.5
0
86.5
-111.2
146.9
-258.1
349.4
0
103.8
-126.3
172.5
-298.8
1729.0
0
510.6
-648.1
955.3
-1603.4
21.1
111.5
133.0
198.8
227.8
253.4
347.3
415.8
493.2
577.7
679.0
3458.4