Socio-economic drivers - EPPA: Difference between revisions
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The socio-economic drivers of EPPA include: 1) exogenous factors, which consist of projections for labor endowment growth, factor-augmented productivity growth, energy productivity growth, and natural resource assets. For each region, it is assumed that the labor endowment increases proportionally to population growth. Since expectations or projections for the baseline economic growth are often in terms of GDP rather than underlying factors such as labor, land, capital, energy productivity, or resource availabilities, model developers have included a 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>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> | The socio-economic drivers of EPPA include: 1) exogenous factors, which consist of projections for labor endowment growth, factor-augmented productivity growth, energy productivity growth, and natural resource assets. For each region, it is assumed that the labor endowment increases proportionally to population growth. Since expectations or projections for the baseline economic growth are often in terms of GDP rather than underlying factors such as labor, land, capital, energy productivity, or resource availabilities, model developers have included a feature that automatically calibrates an additional Hick’s neutral adjustment on top of any biased growth to match a pre-specified GDP growth rate; and 2) endogenous factors, which encompass savings, investment, and fossil fuel resource depletion. Savings and consumption are aggregated in a Leontief approach in the household’s utility function. All savings are used as investment, which meets the demand for capital goods. The capital is divided into a malleable portion with all new investment malleable, and a vintaged non-malleable portion. Capital is region specific, and vintaged capital is sector specific <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>. | ||
Revision as of 21:59, 7 June 2022
The socio-economic drivers of EPPA include: 1) exogenous factors, which consist of projections for labor endowment growth, factor-augmented productivity growth, energy productivity growth, and natural resource assets. For each region, it is assumed that the labor endowment increases proportionally to population growth. Since expectations or projections for the baseline economic growth are often in terms of GDP rather than underlying factors such as labor, land, capital, energy productivity, or resource availabilities, model developers have included a feature that automatically calibrates an additional Hick’s neutral adjustment on top of any biased growth to match a pre-specified GDP growth rate; and 2) endogenous factors, which encompass savings, investment, and fossil fuel resource depletion. Savings and consumption are aggregated in a Leontief approach in the household’s utility function. All savings are used as investment, which meets the demand for capital goods. The capital is divided into a malleable portion with all new investment malleable, and a vintaged non-malleable portion. Capital is region specific, and vintaged capital is sector specific [1].
Note: The documentation of EPPA is 'in preparation' and is not yet 'published'!| Corresponding documentation | |
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| No previous version available | |
| 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 | |
- ↑ 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.