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A forward calibration method for analyzing energy policy in new quantitative trade models

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  • Pothen, Frank
  • Hübler, Michael

Abstract

This article introduces a dynamic forward calibration method for New Quantitative Trade models, particularly a disaggregated Eaton and Kortum model, within a global computable general equilibrium framework. The model is parameterized based on distinct, consistent future development scenarios of the (Northwest) German energy transition with productivity growth and structural change derived through a complex scenario-creation process. The future development scenarios significantly affect European economies, particularly via the EU climate policy costs that significantly increase towards 2050. If (Northwest) Germany's energy transition fails, then its climate policy costs will increase extraordinarily. Structural change, energy efficiency improvements and nearly 100% electricity from renewables drastically reduce the costs.

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  • Pothen, Frank & Hübler, Michael, 2021. "A forward calibration method for analyzing energy policy in new quantitative trade models," Energy Economics, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:eneeco:v:100:y:2021:i:c:s0140988321002589
    DOI: 10.1016/j.eneco.2021.105352
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    Cited by:

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    2. Johannes Ziesmer & Ding Jin & Sneha D Thube & Christian Henning, 2023. "A Dynamic Baseline Calibration Procedure for CGE models," Computational Economics, Springer;Society for Computational Economics, vol. 61(4), pages 1331-1368, April.

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    More about this item

    Keywords

    Energy transition; Forward calibration; Regional model; Structural estimation; New quantitative trade theory;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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