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Computable General equilibrium Models in Environmental and Resource Economics

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Conrad, Klaus (Institut für Volkswirtschaft und Statistik (IVS))
Abstract

The objective of this paper is to give a survey of the theory and application of computable general equilibrium models (CGE-models) in environmental and resource economics. Although CGE models cannot be used to forecast business cycles, they can indicate likely magnitudes of policy-induced changes from future baselines, and they are indispensable for ranking alternative policy measures in environmental policies. The paper emphasizes the important of general versus partial equilibrium models and the advantage of CGE models compared to other macroeconomic models and standard input-output models. It presents models of producer and consumer behavior, of technical change, of abatement technologies and of trade. It also presents several simulation studies in environmental economics based on the use of CGE models. It reviews environmentally related CGE analyses on topics such as global warming, the costs of environmental regulation under different instruments and the double dividend issue. It finally describes some models which look at a two-way link between the environment and economic performance.

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Paper provided by Institut für Volkswirtschaft und Statistik (IVS), University of Mannheim in its series IVS discussion paper series with number 601.

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Handle: RePEc:mea:ivswpa:601

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