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Decarbonizing the Global Economy with Induced Technological Change: Scenarios to 2100 using E3MG

Terry Barker, Haoran Pan, Jonathan Kohler, Rachel Warren, and Sarah Winne

Year: 2006
Volume: Endogenous Technological Change
Number: Special Issue #1
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI1-12
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Abstract:
This paper reports how endogenous economic growth and technological change have been introduced into a global econometric model. It explains how further technological change might be induced by mitigation policies so as to reduce greenhouse gas emissions and stabilize atmospheric concentrations. These are the first results of a structural econometric approach to modeling the global economy using the model E3MG (energy-environment-economy model of the globe), which in turn constitutes one component in the Community Integrated Assessment System (CIAS) of the UK Tyndall Centre. The model is simplified to provide a post-Keynesian view of the long-run, with an indicator of technological progress affecting each region�s exports and energy use. When technological progress is endogenous in this way, long-run growth in global GDP is partly explained by the model. Average permit prices and tax rates about $430/tC (1995) prices after 2050 are sufficient to stabilize atmospheric concentrations at 450ppm CO2 after 2100. They also lead to higher economic growth.



Endogenous Structural Change and Climate Targets Modeling Experiments with Imaclim-R

Renaud Crassous, Jean-Charles Hourcade, Olivier Sassi

Year: 2006
Volume: Endogenous Technological Change
Number: Special Issue #1
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI1-13
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Abstract:
This paper envisages endogenous technical change that results from the interplay between the economic growth engine, consumption, technology and localization patterns. We perform numerical simulations with the recursive dynamic general equilibrium model Imaclim-R to study how modeling induced technical change affects costs of CO2 stabilization. Imaclim-R incorporates innovative specifications about final consumption of transportation and energy to represent critical stylized facts such as rebound effects and demand induction by infrastructures and equipments. Doing so brings to light how induced technical change may not only lower stabilization costs thanks to pure technological progress, but also trigger induction of final demand�effects critical to both the level of the carbon tax and the costs of policy given a specific stabilization target. Finally, we study the sensitivity of total stabilization costs to various parameters including both technical assumptions as accelerated turnover of equipments and non-energy choices as alternative infrastructure policies.



A Note on Price Asymmetry as Induced Technical Change

Hillard G. Huntington

Year: 2006
Volume: Volume 27
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No3-1
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Abstract:
This note evaluates whether fixed time effects (yearly dummy variables) are a better representation than separate price-decomposition terms for induced technical change in energy and oil demand. Fixed time effects are a proxy for all omitted variables that change similarly over time for all countries. Many of these omitted variables have little relevance to technical change. Empirically, statistical tests applied to previous studies reject an important premise of the fixed-time-effect model that energy or oil demand responds symmetrically to price increases and decreases. Moreover, when price-decomposition techniques allow for price-asymmetric responses, the estimated income elasticities are not dramaticalxly different from their fixed-time-effect counterparts, as it is sometimes alleged. There are also practical reasons for choosing models that allow for asymmetric responses to price, especially when evaluating the longrun implications of a number of important energy and environmental issues.





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