Growth effects of carbon policies: Applying a fully dynamic CGE model with heterogeneous capital
AbstractThe 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 InfoArticle provided by Elsevier in its journal Resource and Energy Economics.
Volume (Year): 33 (2011)
Issue (Month): 4 ()
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Web page: http://www.elsevier.com/locate/inca/505569
Carbon policy; CGE models; Energy and endogenous growth; Heterogeneous capital;
Find related papers by JEL classification:
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
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