IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-00716324.html
   My bibliography  Save this paper

Macroeconomic consistency issues in E3 modeling: The continued fable of the elephant and the rabbit

Author

Listed:
  • F. Ghersi

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

  • Jean Charles Hourcade

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique)

Abstract

Starting from a short presentation of the limits of using conventional production functions to hybridize energy-economy relationships, this paper presents a methodology aiming at a better integration of bottom-up policy scenarios in a top-down static general equilibrium framework. Along the lines of Ahmad's innovation possibility curve, the methodology consists in implementing top-down envelopes of production and demand functions, whose variable point elasticities of substitution provide a flexible interface for calibration on any bottom-up expertise. Numerical experiments assessing the impact of a rising carbon tax on the global 2030 economy compare the application of this methodology to that of two standard CES-based approaches. Results confirm that, in case of large departures from reference scenarios or of strong convexities in bottom-up results, the use of conventional CES production and utility functions may lead to a significant bias in cost assessment. Copyright © 2006 by the IAEE. All rights reserved.

Suggested Citation

  • F. Ghersi & Jean Charles Hourcade, 2006. "Macroeconomic consistency issues in E3 modeling: The continued fable of the elephant and the rabbit," Post-Print hal-00716324, HAL.
  • Handle: RePEc:hal:journl:hal-00716324
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Renaud Crassous, Jean-Charles Hourcade, Olivier Sassi, 2006. "Endogenous Structural Change and Climate Targets Modeling Experiments with Imaclim-R," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 259-276.
    2. McFarland, J. R. & Reilly, J. M. & Herzog, H. J., 2004. "Representing energy technologies in top-down economic models using bottom-up information," Energy Economics, Elsevier, vol. 26(4), pages 685-707, July.
    3. Renaud Crassous, Jean-Charles Hourcade, Olivier Sassi, 2006. "Endogenous Structural Change and Climate Targets Modeling Experiments with Imaclim-R," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 259-276.
    4. Manuel Frondel & Christoph M. Schmidt, 2002. "The Capital-Energy Controversy: An Artifact of Cost Shares?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 53-79.
    5. Bernstein, Paul M. & Montgomery, W. David & Rutherford, Thomas F., 1999. "Global impacts of the Kyoto agreement: results from the MS-MRT model," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 375-413, August.
    6. Avi J. Cohen, 2003. "Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 199-214, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ruben Bibas & Aurélie Méjean, 2012. "Negative emissions and ambitious climate policies in a second best world: A general equilibrium assessment of technology options in the electricity sector," EcoMod2012 4569, EcoMod.
    2. Julien Lefevre, 2018. "Modeling the Socioeconomic Impacts of the Adoption of a Carbon Pricing Instrument – Literature review," CIRED Working Papers hal-03128619, HAL.
    3. Kai LESSMANN & Robert MARSCHINSKI & Ottmar EDENHOFER, 2008. "The Effects of Trade Sanctions in International Environmental Agreements," EcoMod2008 23800079, EcoMod.
    4. Bibas, Ruben & Méjean, Aurélie & Hamdi-Cherif, Meriem, 2015. "Energy efficiency policies and the timing of action: An assessment of climate mitigation costs," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 137-152.
    5. Lessmann, Kai & Marschinski, Robert & Edenhofer, Ottmar, 2009. "The effects of tariffs on coalition formation in a dynamic global warming game," Economic Modelling, Elsevier, vol. 26(3), pages 641-649, May.
    6. Salaheddine Soummane & Frédéric Ghersi & Franck Lecocq, 2022. "Structural Transformation Options of the Saudi Economy Under Constraint of Depressed World Oil Prices," The Energy Journal, , vol. 43(3), pages 185-204, May.
    7. Gregory Casey, 2024. "Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 192-228.
    8. Sue Wing, Ian & Eckaus, Richard S., 2007. "The implications of the historical decline in US energy intensity for long-run CO2 emission projections," Energy Policy, Elsevier, vol. 35(11), pages 5267-5286, November.
    9. William Wills & Emilio Lebre La Rovere & Carolina Grottera & Giovanna Ferrazzo Naspolini & Gaëlle Le Treut & Frédéric Ghersi & Julien Lefèvre & Carolina Burle Schmidt Dubeux, 2022. "Economic and social effectiveness of carbon pricing schemes to meet Brazilian NDC targets," Climate Policy, Taylor & Francis Journals, vol. 22(1), pages 48-63, January.
    10. Gunnar Luderer & Valentina Bosetti & Michael Jakob & Henri Waisman & Jan Steckel & Ottmar Edenhofer, 2009. "Towards a Better Understanding of Disparities in Scenarios of Decarbonization: Sectorally Explicit Results from the RECIPE Project," Working Papers 2009.117, Fondazione Eni Enrico Mattei.
    11. Dorothée Charlier & Anna Risch & Claire Salmon, 2016. "Reducing the Energy Burden of the Poor and Greenhouse Gas Emissions: Can We Kill Two Birds with One Stone?," Policy Papers 2016.01, FAERE - French Association of Environmental and Resource Economists.
    12. Alexander Golub & Oleg Lugovoy & Anil Markandya & Ramon Arigoni Ortiz & James Wang, 2013. "Regional IAM: analysis of risk-adjusted costs and benefits of climate policies," Working Papers 2013-06, BC3.
    13. Gusdorf, Francois & Hallegatte, Stephane, 2007. "Behaviors and housing inertia are key factors in determining the consequences of a shock in transportation costs," Energy Policy, Elsevier, vol. 35(6), pages 3483-3495, June.
    14. Guivarch, Céline & Monjon, Stéphanie, 2017. "Identifying the main uncertainty drivers of energy security in a low-carbon world: The case of Europe," Energy Economics, Elsevier, vol. 64(C), pages 530-541.
    15. Gissela Landa Rivera & Paul Malliet & Aurélien Saussay & Frédéric Reynès, 2018. "The State of Applied Environmental Macroeconomics," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 133-149.
    16. Céline Guivarch & Renaud Crassous & Olivier Sassi & Stéphane Hallegatte, 2009. "The costs of climate policies in a second best world with labour market," CIRED Working Papers hal-00866429, HAL.
    17. Sandrine Mathy & Céline Guivarch, 2009. "Climate policies : what if emerging country baseline were not so optimistic? - a case study related to India," CIRED Working Papers halshs-00366276, HAL.
    18. repec:hal:spmain:info:hdl:2441/3qbhmo3oe19bo8u5dc21qfic27 is not listed on IDEAS
    19. F. Souty & T. Brunelle & P. Dumas & B. Dorin, & P. Ciais & R. Crassous, 2012. "The Nexus Land-Use Model, an Approach Articulating Biophysical Potentials and Economic Dynamics to Model Competition for Land-Uses," Working Papers 2012.16, Fondazione Eni Enrico Mattei.
    20. Guivarch, Céline & Hallegatte, Stéphane & Crassous, Renaud, 2009. "The resilience of the Indian economy to rising oil prices as a validation test for a global energy-environment-economy CGE model," Energy Policy, Elsevier, vol. 37(11), pages 4259-4266, November.
    21. Charlier, Dorothée & Risch, Anna & Salmon, Claire, 2018. "Energy Burden Alleviation and Greenhouse Gas Emissions Reduction: Can We Reach Two Objectives With One Policy?," Ecological Economics, Elsevier, vol. 143(C), pages 294-313.

    More about this item

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00716324. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.