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

Author

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  • F. Ghersi

    (Department of Economics, Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique)

  • Jean Charles Hourcade

    () (CIRED - Centre International de Recherche sur l'Environnement et le Développement - ENGREF - Ecole Nationale du Génie Rural, des Eaux et des Forêts - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - 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
    Note: View the original document on HAL open archive server: https://hal-enpc.archives-ouvertes.fr/hal-00716324
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    1. repec:dau:papers:123456789/13160 is not listed on IDEAS
    2. Després, Jacques & Hadjsaid, Nouredine & Criqui, Patrick & Noirot, Isabelle, 2015. "Modelling the impacts of variable renewable sources on the power sector: Reconsidering the typology of energy modelling tools," Energy, Elsevier, vol. 80(C), pages 486-495.
    3. Pierre Besson & Nina Kousnetzoff, 2009. "Les impacts économiques du changement climatique : enjeux de modélisation," Working Papers 2009-36, CEPII research center.
    4. Emmanuel Combet & Frédéric Ghersi & Jean-Charles Hourcade & Camille Thubin, 2010. "La fiscalité carbone au risque des enjeux d'équité," Revue française d'économie, Presses de Sciences-Po, vol. 0(2), pages 59-91.
    5. Pablo Pintos & Pedro Linares, 2016. "Assessing the EU ETS with an Integrated Model," Working Papers 01-2016, Economics for Energy.
    6. Emmanuel Combet & Frédéric Ghersi & Jean Charles Hourcade & Daniel Théry, 2009. "Need a Carbon Tax be Socially Regressive ? True Challenges and Wrong Debates," Working Papers hal-00866410, HAL.
    7. Frédéric Ghersi, 2018. "The IMACLIM-P Model Version 3.4," CIRED Working Papers hal-01691764, HAL.
    8. 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.
    9. Ruben Bibas & Aurélie Méjean, 2012. "Bioenergy and CO2 Sequestration: Climate Policies Beyond Technological Constraints," Working Papers 2012.88, Fondazione Eni Enrico Mattei.
    10. Emmanuel Combet & Frédéric Ghersi & Jean Charles Hourcade, 2009. "Taxe carbone, une mesure socialement régressive ? Vrais problèmes et faux débats," CIRED Working Papers hal-00866409, HAL.
    11. Frédéric Ghersi & Emmanuel Combet & Jean Charles Hourcade & Camille Thubin, 2010. "Économie d'une fiscalité carbone en France - Rapport d'étude réalisée avec le soutien de l'ADEME et de la CFDT‐IRES," Post-Print halshs-00458205, HAL.
    12. 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.
    13. Gonand, Frédéric & Jouvet, Pierre-André, 2015. "The “second dividend” and the demographic structure," Journal of Environmental Economics and Management, Elsevier, vol. 72(C), pages 71-97.
    14. Santamaría, Alberto & Linares, Pedro & Pintos, Pablo, 2014. "The effects of carbon prices and anti-leakage policies on selected industrial sectors in Spain – Cement, steel and oil refining," Energy Policy, Elsevier, vol. 65(C), pages 708-717.
    15. Frederic Gonand, 2014. "Dynamic Impacts on Growth and Intergenerational Effects of Energy Transition in a Time of Fiscal Consolidation," Working Papers 1401, Chaire Economie du climat.
    16. Emmanuel Combet & Frédéric Ghersi & Jean Charles Hourcade, 2009. "Taxe carbone, une mesure socialement régressive ? Vrais problèmes et faux débats," Working Papers hal-00866409, HAL.
    17. repec:dau:papers:123456789/12507 is not listed on IDEAS
    18. Xavier Labandeira, Pedro Linares and Miguel Rodriguez, 2009. "An Integrated Approach to Simulate the impacts of Carbon Emissions Trading Schemes," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    19. Jean-Charles Hourcade & Michael Grubb & Aurélie Méjean, 2015. "The 'Dark Matter' in the Search for Sustainable Growth: Energy, Innovation and the Financially Paradoxical Role of Climate Confidence," Post-Print hal-01646242, HAL.
    20. Emmanuel Combet & Frédéric Ghersi & Jean Charles Hourcade & Daniel Théry, 2010. "Carbon Tax and Equity : The Importance of Policy Design," Post-Print halshs-00692516, HAL.
    21. Emmanuel Combet & Frédéric Ghersi & Jean Charles Hourcade & Daniel Théry, 2009. "Need a Carbon Tax be Socially Regressive ? True Challenges and Wrong Debates," CIRED Working Papers hal-00866410, HAL.
    22. Rodrigues, Renato & Linares, Pedro, 2014. "Electricity load level detail in computational general equilibrium – Part I – Data and calibration," Energy Economics, Elsevier, vol. 46(C), pages 258-266.
    23. Julien Lefevre, 2016. "A description of the IMACLIM-BR model: a modeling framework to assess climate and energy policy in Brazil
      [Une description du modèle IMACLIM-BR: un outil de modélisation pour évaluer les politiques      ," CIRED Working Papers hal-01685947, HAL.
    24. Li, Francis G.N. & Trutnevyte, Evelina & Strachan, Neil, 2015. "A review of socio-technical energy transition (STET) models," Technological Forecasting and Social Change, Elsevier, vol. 100(C), pages 290-305.
    25. Ruben Bibas & Aurélie Méjean, 2014. "Potential and limitations of bioenergy for low carbon transitions," Climatic Change, Springer, vol. 123(3), pages 731-761, April.

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    JEL classification:

    • F0 - International Economics - - General

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