Sensitivity of policy simulation to benchmark scenarios in CGE models: illustration with carbon leakage
In a Computable General Equilibrium (CGE) setting, we show how the cost of a carbon policy for an open economy depends on the assumptions made about future exogenous structural changes. For dynamic CGE models, we propose an analytical framework derived from static CGE models and associate structural changes with the construction of a non-stationary dynamic Social Accounting Matrix (SAM). Such matrices are benchmark scenarios that embed the modelers view on how technologies and preferences should evolve. These benchmark scenarios must be replicable and relevant (by matching what the modeler regards as plausible). To combine these two properties and produce alternative benchmark scenarios, we use partial parameter adjustments and general equilibrium computation. We produce three alternative benchmark scenarios that differ in terms of energy efficiency gains and structural shift in GDP. For each benchmark scenario, we then simulate the GDP deviation induced by a shock on carbon price. We show the dependence of the simulated GDP losses and terms of trade response on the benchmark scenario considered.
|Date of creation:||31 Dec 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Raouf, BOUCEKKINE & David, DE LA CROIX & Omar, LICANDRO, 2006.
Discussion Papers (ECON - Département des Sciences Economiques)
2006014, Université catholique de Louvain, Département des Sciences Economiques.
- BOUCEKKINE, Raouf & DE LA CROIX, David & LICANDRO, Omar, 2006. "Vintage capital," CORE Discussion Papers 2006024, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Raouf Boucekkine & David de la Croix & Omar Licandro, 2006. "Vintage Capital," Economics Working Papers ECO2006/8, European University Institute.
- Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, March.
- Rainer Klump & Peter McAdam & Alpo Willman, 2012.
"The Normalized Ces Production Function: Theory And Empirics,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 26(5), pages 769-799, December.
- Klump, Rainer & McAdam, Peter & Willman, Alpo, 2011. "The normalized CES production function: theory and empirics," Working Paper Series 1294, European Central Bank.
- Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
- Böhringer, Christoph & Rutherford, Thomas Fox & Wiegard, Wolfgang, 2003. "Computable general equilibrium analysis: Opening a black box," ZEW Discussion Papers 03-56, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Di Maria, C. & van der Werf, E.H., 2005.
"Carbon Leakage Revisited : Unilateral Climate Policy with Directed Technical Change,"
2005-68, Tilburg University, Center for Economic Research.
- Corrado Maria & Edwin Werf, 2008. "Carbon leakage revisited: unilateral climate policy with directed technical change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(2), pages 55-74, February.
- Corrado Di Maria & Edwin van der Werf, 2006. "Carbon Leakage Revisited: Unilateral Climate Policy with Directed Technical Change," Working Papers 2006.94, Fondazione Eni Enrico Mattei.
- Siebert, Horst, 1979. "Environmental policy in the two-country-case," Open Access Publications from Kiel Institute for the World Economy 3526, Kiel Institute for the World Economy (IfW).
- Daron Acemoglu, 2003.
"Labor- And Capital-Augmenting Technical Change,"
Journal of the European Economic Association,
MIT Press, vol. 1(1), pages 1-37, 03.
- Meriem Hamdi-Cherif & Céline Guivarch & Philippe Quirion, 2011.
"Sectoral targets for developing countries: combining 'common but differentiated re-sponsibilities' with 'meaningful participation',"
Taylor & Francis Journals, vol. 11(1), pages 731-751, January.
- Meriem Hamdi-Cherif & Céline Guivarch & Philippe Quirion, 2011. "Sectoral Targets for Developing Countries: Combining "Common but differentiated Responsibilities with meaningful Participation"," Post-Print halshs-00692486, HAL.
- Meriem Hamdi-Cherif & Céline Guivarch & Philippe Quirion, 2010. "Sectoral Targets for Developing Countries: Combining "Common but Differentiated Responsibilities" with "Meaningful participation"," Working Papers 2010.37, Fondazione Eni Enrico Mattei.
- Olivier de La Grandville & Rainer Klump, 2000. "Economic Growth and the Elasticity of Substitution: Two Theorems and Some Suggestions," American Economic Review, American Economic Association, vol. 90(1), pages 282-291, March.
- Valentina Bosetti, Carlo Carraro, Marzio Galeotti, Emanuele Massetti, Massimo Tavoni, 2006. "A World induced Technical Change Hybrid Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 13-38.
- Klump, Rainer & Preissler, Harald, 2000. " CES Production Functions and Economic Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 41-56, March.
- Stef Proost & Denise Van Regemorter, 2003.
"Climate change policy in European countries and its effects on industry,"
Energy, Transport and Environment Working Papers Series
ete0305, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
- Stef Proost & Denise Van Regemorter, 2004. "Climate Change Policy in European Countries and its effects on industry," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 9(4), pages 453-473, October.
- Mansur, Ahsan & Whalley, John, 1982. "A Decomposition Algorithm for General Equilibrium Computation with Application to International Trade Models," Econometrica, Econometric Society, vol. 50(6), pages 1547-57, November.
- Arne Henningsen & Géraldine Henningsen, 2011. "Econometric Estimation of the “Constant Elasticity of Substitution" Function in R: Package micEconCES," IFRO Working Paper 2011/9, University of Copenhagen, Department of Food and Resource Economics.
- Klump, Rainer & Saam, Marianne, 2008.
"Calibration of normalised CES production functions in dynamic models,"
Elsevier, vol. 99(2), pages 256-259, May.
- Klump, Rainer & Saam, Marianne, 2006. "Calibration of normalised CES production functions in dynamic models," ZEW Discussion Papers 06-78, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- F. R. Casas, 1984. "Imperfect Factor Mobility: A Generalization and Synthesis of Two-Sector Models of International Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 747-61, November.
- Wendner, Ronald, 1999. "A Calibration Procedure of Dynamic CGE Models for Non-steady State Situations Using GEMPACK," Computational Economics, Springer;Society for Computational Economics, vol. 13(3), pages 265-87, June.
- Webster, Mort & Paltsev, Sergey & Reilly, John, 2008. "Autonomous efficiency improvement or income elasticity of energy demand: Does it matter?," Energy Economics, Elsevier, vol. 30(6), pages 2785-2798, November.
- Philippe Quirion & Julie Rozenberg & Olivier Sassi & Adrien Vogt-Schilb, 2011.
"How CO2 Capture and Storage Can Mitigate Carbon Leakage,"
2011.15, Fondazione Eni Enrico Mattei.
- Philippe Quirion & Julie Rozenberg & Olivier Sassi & Adrien Vogt-Schilb, 2011. "How CO2 Capture and Storage Can Mitigate Carbon Leakage," Post-Print hal-00797615, HAL.
- Miguel A. León-Ledesma & Peter McAdam & Alpo Willman, 2010.
"Identifying the Elasticity of Substitution with Biased Technical Change,"
American Economic Review,
American Economic Association, vol. 100(4), pages 1330-57, September.
- León-Ledesma, Miguel A. & McAdam, Peter & Willman, Alpo, 2009. "Identifying the elasticity of substitution with biased technical change," Working Paper Series 1001, European Central Bank.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2012063. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)
If references are entirely missing, you can add them using this form.