Socio-economic drivers - EPPA: Difference between revisions

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The dynamics of the model are determined by both exogenous and endogenous factors. Exogenous factors include projections for labor endowment growth, factor-augmented productivity growth, energy productivity growth, and natural resource assets. For each region, we assume that the labor endowment increases proportionally to population growth. We then have the option to specify differential productivity growth for labor, capital and land. Since expectations of future economic growth are often in terms of GDP rather than underlying factors such as labor, land, capital, energy productivity, or resource availabilities, we have included a model feature that automatically calibrates an additional Hick’s neutral adjustment on top of any biased growth to match a pre-specified GDP growth rate.<ref>test</ref>
The key socio-economic driver of EPPA is the Hick’s neutral productivity growth, which is calibrated to match a baseline GDP growth trajectory under 1) a set of exogenously given factors, including labor endowment growth, which is assumed to increase proportionally to the population growth and autonomous energy efficiency improvement (AEEI), and 2) a set of factors determined by the model dynamics, which encompass savings, investment, fossil fuel resource depletion, and the evolution of technology specific factor for each backstop technology. While the Hick’s neutral productivity levels are held constant across scenarios, changes in prices and model dynamics will determine levels of variables such as resource allocations, sectoral outputs and GDP <ref>Chen, Y.-H. H., S. Paltsev, J. Reilly, J. Morris and M. Babiker (2016). Long-term economic modeling for climate change assessment. Economic Modeling, 52, 867–883.</ref>.


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Latest revision as of 18:59, 11 July 2022

The key socio-economic driver of EPPA is the Hick’s neutral productivity growth, which is calibrated to match a baseline GDP growth trajectory under 1) a set of exogenously given factors, including labor endowment growth, which is assumed to increase proportionally to the population growth and autonomous energy efficiency improvement (AEEI), and 2) a set of factors determined by the model dynamics, which encompass savings, investment, fossil fuel resource depletion, and the evolution of technology specific factor for each backstop technology. While the Hick’s neutral productivity levels are held constant across scenarios, changes in prices and model dynamics will determine levels of variables such as resource allocations, sectoral outputs and GDP [1].

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Model Documentation - EPPA

Corresponding documentation
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Model information
Model link
Institution Massachusetts Institute of Technology (MIT), USA, https://globalchange.mit.edu/.
Solution concept General equilibrium (closed economy)
Solution method Optimization
Anticipation
  1. ↑ Chen, Y.-H. H., S. Paltsev, J. Reilly, J. Morris and M. Babiker (2016). Long-term economic modeling for climate change assessment. Economic Modeling, 52, 867–883.
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