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Growth effects of carbon policies: Applying a fully dynamic CGE model with heterogeneous capital

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  • Bretschger, Lucas
  • Ramer, Roger
  • Schwark, Florentine

Abstract

The paper develops a new type of computable general equilibrium (CGE) model in which growth is fully endogenous, based on the increasing specialization of sector-specific capital varieties. The model is used to simulate the effects of carbon policies on consumption, welfare, and sectoral development in the long run. The benchmark scenario is calculated based on endogenous sector-specific gains from specialization, which carry over to the simulations of a carbon policy following the 2°C target. Applying the model to the Swiss economy, we find that carbon policy leads to growth rates of knowledge intensive sectors that are higher than in the benchmark and that all the non-energy sectors show positive growth rates. Compared to a state in which climate change has no negative effect, consumption in 2050 is reduced by 4.5% and entails a moderate but not negligible welfare loss.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 33 (2011)
Issue (Month): 4 ()
Pages: 963-980

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Handle: RePEc:eee:resene:v:33:y:2011:i:4:p:963-980

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Web page: http://www.elsevier.com/locate/inca/505569

Related research

Keywords: Carbon policy; CGE models; Energy and endogenous growth; Heterogeneous capital;

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References

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Citations

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Cited by:
  1. Lars Calmfors & Giancarlo Corsetti & John Hassler & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Ákos Valentinyi & Xavier Vives, 2012. "Chapter 6: Pricing Climate Change," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 131-145, 02.
  2. Pardo Martínez, Clara Inés, 2013. "An analysis of eco-efficiency in energy use and CO2 emissions in the Swedish service industries," Socio-Economic Planning Sciences, Elsevier, vol. 47(2), pages 120-130.
  3. Lucas Bretschger & Lin Zhang & Roger Ramer, 2012. "Economic effects of a nuclear-phase out policy: A CGE analysis," CER-ETH Economics working paper series 12/167, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  4. Thepkhun, Panida & Limmeechokchai, Bundit & Fujimori, Shinichiro & Masui, Toshihiko & Shrestha, Ram M., 2013. "Thailand's Low-Carbon Scenario 2050: The AIM/CGE analyses of CO2 mitigation measures," Energy Policy, Elsevier, vol. 62(C), pages 561-572.

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