Production system and representation of economic sectors - TIAM-UCL
| Corresponding documentation | |
|---|---|
| Previous versions | |
| Model information | |
| Model link | |
| Institution | University College London (UCL), UK, https://www.ucl.ac.uk. |
| Solution concept | Partial equilibrium (price elastic demand) |
| Solution method | Linear optimisation |
| Anticipation | Perfect Foresight
(Stochastic and myopic runs are also possible) |
We have added a simplified general equilibrium macroeconomic growth module developed by Kypreos and Lehtila (2013). Macro Stand-Alone (MSA) is a single agent; single sector, multi-regional, general equilibrium optimal growth model which maximises discounted utility of a single consumer-producer agent. GDP is comprised of consumption, investment and energy system costs. Total economic production is determined by a combination of energy, capital and labour where energy substitutes with a capital-labour composite via an elasticity of substitution parameter. Quadratic cost functions and demand decoupling factors (essentially elasticity parameters for each period and demand)are estimated from the calibration routine are fed from TIAM-UCL to MSA. MSA is then solved and the new energy demands are given back into TIAM-UCL which is then solved again. The iteration continues until the model converges, defined by the change in energy service demand variation between interactions slowing to within a specified tolerance.