Introduction
The paper discusses two articles on Economics and develops an understanding of how such articles are written, analyses the central theme, and also frames questions for the author of the articles.
Analysis and Discussion
Duchin (May 2007) speaks of how economists can collaborate to explore energy choices capable of reducing carbon emissions on a global scale. All forms of manufacturing and consumption activities involve the use of energy, and economists possess theoretical and analytic frameworks relating production and consumption in individual economies with international trade among them. Economists are experts in understanding the relations between global economic activities and the use of energy and, to some extent, about the possible feedback of climate change on the economic system.
These relations are mediated by people’s lifestyles and consumption patterns, whether in affluence or poverty, and the technological options embodied in stocks of capital. Economists can contribute a global economic framework for analyzing the economic and environmental impacts of substantial changes in the economic activities involving the use of energy.
They have begun intensive collaboration with engineers and other experts in technology to assure that their representations of the technological options are concrete and realistic and not simply symbolic. The author has discussed various energy options available in the global economy and has proposed a global economic framework, the World Trade Model, and other models of the world economy that would help in developing a better understanding of the energy options.
Questions that arise, based on the scenarios created are what would happen to the economies of scale when alternate, high fuels that have low carbon emissions are used? The author speaks of a model where labor-intensive industries would shift to areas where alternative energy sources are available. Would not such a move create widespread disparities in industrial output and affect labor economies. Another question proposed is that the models are ignoring factors such as the transport of oil and coal from the hinterlands to areas of high economic activity. How much opportunity costs would be lost in transferring to the new models of low carbon emission issues and global warming.
Duchin (April 2007) has discussed the mathematical basis for input-output economics, the major types of models, and the underlying economic theory. These models have certain features that make them well suited for understanding the connections between the economy and they include the dual physical and price representations and the representation of resource inputs as factors of production, whether they are priced or not. Input-output economics shares deal with achieving efficiency in the use of resources to produce goods. It also accommodates other objectives, not only conceptually but also operationally and it differs from other schools of thought in not imposing growth and efficiency objectives on its mathematical models.
Both resource inputs and wastes generated are standard variables in an input-output analysis that are explicitly represented in equations, whether they have prices or not. These features, while not always fully exploited, make input-output economics especially suitable for environmental analysis. The basic input-output model has some adaptations such as the Regional and Multi-Regional Input-Output Models, Dynamic Input-Output Models, World Input-Output Models, and others. All these models are based on the fact that while products move in one direction, money moves in the opposite direction.
The model gives rise to certain questions and these are: While it is true that products move in one direction and also that money moves in the other directions, the volumes are not correlated. To clarify, while raw materials such as coal, ore, and others are generated by poor workers and the products are fed to the value chain, creating the final product bought by the consumer, the actual flow of money shrinks as it moves in the opposite direction and the poor worker remains poor at the end of the business cycle while the middlemen create a repository of finance. The model cannot give mathematical formulae to this occurrence.
The waste products and by-products are not accounted for in the model and they have a separate workflow and economic flow with financial implications on the environment and climate. The model proposed by the author does not recognize this occurrence.
Conclusion
The paper has examined the two articles, analyzed them, and presented the main points. The paper has also posed some questions to the author of the papers, questions that arise from the practical implications of the models.
References
Duchin Faye. 2007. Mathematical Models in Input-Output Economics. NY, USA, Rensselaer, Working Papers in Economics. Number 0703.
Duchin Faye. 2007. Energy and the Global Economy. NY, USA, Rensselaer, Working Papers in Economics. Number 0704.