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Towards General Equilibrium in a Technology-Rich Model with Empirically Estimated Behavioral Parameters

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  • Chris Bataille, Mark Jaccard, John Nyboer and Nic Rivers

Abstract

Most energy-economy policy models offered to policy makers are deficient in terms of at least one of technological explicitness, microeconomic realism, or macroeconomic completeness. We herein describe CIMS, a model which starts with the technological explicitness of the Òbottom-upÓ approach and adds the microeconomic realism and macroeconomic completeness of the ÒtopdownÓ CGE approach. This paper demonstrates CIMSÕ direct utility for policy analysis, and also how it can be used to better estimate the long run capital-forenergy substitution elasticity (ESUB) and autonomous energy efficiency index (AEEI) technology parameters used in top-down models. By running CIMS under several possible energy price futures and observing their effects on capital and energy input shares and energy consumption, we estimate an economy-wide ESUB of 0.26 and an AEEI of 0.57%, with significant sectoral differences for both parameters.

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  • Chris Bataille, Mark Jaccard, John Nyboer and Nic Rivers, 2006. "Towards General Equilibrium in a Technology-Rich Model with Empirically Estimated Behavioral Parameters," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 93-112.
    • Handle: RePEc:aen:journl:2006se_jaccard-a05
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