Trade - REMIND-MAgPIE - Revision history

Rineke Oostenrijk: Text replacement - "REMIND" to "REMIND-MAgPIE"

2021-11-21T13:34:16Z

Text replacement - "REMIND" to "REMIND-MAgPIE"

← Older revision		Revision as of 15:34, 21 November 2021
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	{{ModelDocumentationTemplate		{{ModelDocumentationTemplate
	\|IsEmpty=No		\|IsEmpty=No
	\|IsDocumentationOf=REMIND		\|IsDocumentationOf=REMIND-MAgPIE
	\|DocumentationCategory=Trade		\|DocumentationCategory=Trade
	}}		}}
	REMIND considers the trade of coal, gas, oil, biomass, uranium, the composite good (aggregated output of the macro-economic system), and emissions permits (in the case of climate policy). It assumes that renewable energy sources (other than biomass) and secondary energy carriers are non-tradable across regions. As an exception, REMIND can consider bilateral trade in electricity between specific region pairs (e.g., Europe and North Africa / Middle East), but this is not part of the default scenario. To be consistent with trade statistics, trade in petroleum products is subsumed under crude oil trade.		REMIND-MAgPIE considers the trade of coal, gas, oil, biomass, uranium, the composite good (aggregated output of the macro-economic system), and emissions permits (in the case of climate policy). It assumes that renewable energy sources (other than biomass) and secondary energy carriers are non-tradable across regions. As an exception, REMIND-MAgPIE can consider bilateral trade in electricity between specific region pairs (e.g., Europe and North Africa / Middle East), but this is not part of the default scenario. To be consistent with trade statistics, trade in petroleum products is subsumed under crude oil trade.

	For each good i a global trade balance equation ensures that markets are cleared:		For each good i a global trade balance equation ensures that markets are cleared:

	<figure id="fig:~~REMIND_3~~.2.1 3">		<figure id="fig:REMIND-MAgPIE_3.2.1 3">
	[[File:REMIND trade 1.JPG]]		[[File:REMIND-MAgPIE trade 1.JPG]]
	</figure>		</figure>

	REMIND models regional trade via a common pool, with the exception of the bilateral electricity trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models <ref>Heckscher EF, Ohlin B, Flam H, Flanders MJ (1991) Heckscher-Ohlin trade theory. MIT Press, Cambridge, Massachusetts</ref>, trade between regions is induced by differences in factor endowments and technologies. REMIND also represents the additional possibility of inter-temporal trade. This can be interpreted as capital trade or borrowing and lending.		REMIND-MAgPIE models regional trade via a common pool, with the exception of the bilateral electricity trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models <ref>Heckscher EF, Ohlin B, Flam H, Flanders MJ (1991) Heckscher-Ohlin trade theory. MIT Press, Cambridge, Massachusetts</ref>, trade between regions is induced by differences in factor endowments and technologies. REMIND-MAgPIE also represents the additional possibility of inter-temporal trade. This can be interpreted as capital trade or borrowing and lending.
	For each region, the value of exports must balance the value of imports within the time horizon of the model. This is ensured by the inter-temporal budget constraint, where πir is the present value price of good i.		For each region, the value of exports must balance the value of imports within the time horizon of the model. This is ensured by the inter-temporal budget constraint, where πir is the present value price of good i.

	<figure id="fig:~~REMIND_3~~.2.1 4">		<figure id="fig:REMIND-MAgPIE_3.2.1 4">
	[[File:REMIND trade 2.JPG]]		[[File:REMIND-MAgPIE trade 2.JPG]]
	</figure>		</figure>

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	Inter-temporal trade and the capital mobility implied by trade in the composite good, cause prices of mobile factors to equalize, thus providing the basis for an inter-temporal and inter-regional equilibrium. Since no capital market distortions are considered, the interest rates equalize across regions. Similarly, permit prices equalize across regions, unless their trade is restricted. By contrast, final energy prices and wages can differ across regions because these factors are immobile. Prices for traded primary energy carriers differ according to the transportation costs.		Inter-temporal trade and the capital mobility implied by trade in the composite good, cause prices of mobile factors to equalize, thus providing the basis for an inter-temporal and inter-regional equilibrium. Since no capital market distortions are considered, the interest rates equalize across regions. Similarly, permit prices equalize across regions, unless their trade is restricted. By contrast, final energy prices and wages can differ across regions because these factors are immobile. Prices for traded primary energy carriers differ according to the transportation costs.

	<figure id="fig:~~REMIND_3~~.2.1 5">		<figure id="fig:REMIND-MAgPIE_3.2.1 5">
	[[File:REMIND trade 3.JPG]]		[[File:REMIND-MAgPIE trade 3.JPG]]
	</figure>		</figure>

	Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. The inter-temporal budget constraints clear debts and assets that accrue through trade over time. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions. Trade of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.		Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. The inter-temporal budget constraints clear debts and assets that accrue through trade over time. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND-MAgPIE models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions. Trade of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND-MAgPIE are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.


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	'''Table 1.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.		'''Table 1.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.

	<figtable id="tab:~~REMINDtable_2~~">		<figtable id="tab:REMIND-MAgPIEtable_2">
	[[File:REMIND trade 4.JPG]]		[[File:REMIND-MAgPIE trade 4.JPG]]
	</figtable>		</figtable>

Mathijs Harmsen: Mathijs Harmsen moved page Trade - REMIND to Trade - REMIND-MAgPIE without leaving a redirect: Text replacement - "REMIND" to "REMIND-MAgPIE"

2021-11-18T12:14:01Z

Mathijs Harmsen moved page Trade - REMIND to Trade - REMIND-MAgPIE without leaving a redirect: Text replacement - "REMIND" to "REMIND-MAgPIE"

← Older revision

Revision as of 14:14, 18 November 2021

Laura Delsa at 10:51, 3 February 2017

2017-02-03T10:51:58Z

@@ Line 12: / Line 12: @@
 </figure>
-REMIND models regional trade via a common pool, with the exception of the bilateral electricity trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models (Heckscher et al. 1991), trade between regions is induced by differences in factor endowments and technologies. REMIND also represents the additional possibility of inter-temporal trade. This can be interpreted as capital trade or borrowing and lending.
+REMIND models regional trade via a common pool, with the exception of the bilateral electricity trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models <ref>Heckscher EF, Ohlin B, Flam H, Flanders MJ (1991) Heckscher-Ohlin trade theory. MIT Press, Cambridge, Massachusetts</ref>, trade between regions is induced by differences in factor endowments and technologies. REMIND also represents the additional possibility of inter-temporal trade. This can be interpreted as capital trade or borrowing and lending.
 For each region, the value of exports must balance the value of imports within the time horizon of the model. This is ensured by the inter-temporal budget constraint, where πir is the present value price of good i.
@@ Line 38: / Line 38: @@
 [[File:REMIND trade 4.JPG]]
 </figtable>

Laura Delsa at 15:09, 1 February 2017

2017-02-01T15:09:34Z

← Older revision		Revision as of 17:09, 1 February 2017
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	'''Table 1.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.		'''Table 1.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.

	<~~figure~~ id="~~fig~~:REMINDtable_2">		<figtable id="tab:REMINDtable_2">
	[[File:REMIND trade 4.JPG]]		[[File:REMIND trade 4.JPG]]
	</~~figure~~>		</figtable>

Laura Delsa at 14:40, 1 February 2017

2017-02-01T14:40:37Z

← Older revision		Revision as of 16:40, 1 February 2017
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	In the absence of inter-regional externalities, both solution approaches converge to the same solution.		In the absence of inter-regional externalities, both solution approaches converge to the same solution.

	'''Table 2.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.		'''Table 1.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.

	<figure id="fig:REMINDtable_2">		<figure id="fig:REMINDtable_2">
	[[File:REMIND trade 4.JPG]]		[[File:REMIND trade 4.JPG]]
	</figure>		</figure>

Laura Delsa at 10:40, 1 February 2017

2017-02-01T10:40:46Z

← Older revision		Revision as of 12:40, 1 February 2017
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	For each good i a global trade balance equation ensures that markets are cleared:		For each good i a global trade balance equation ensures that markets are cleared:

			<figure id="fig:REMIND_3.2.1 3">
	[[File:REMIND trade 1.JPG]]		[[File:REMIND trade 1.JPG]]
			</figure>

	REMIND models regional trade via a common pool, with the exception of the bilateral electricity trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models (Heckscher et al. 1991), trade between regions is induced by differences in factor endowments and technologies. REMIND also represents the additional possibility of inter-temporal trade. This can be interpreted as capital trade or borrowing and lending.		REMIND models regional trade via a common pool, with the exception of the bilateral electricity trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models (Heckscher et al. 1991), trade between regions is induced by differences in factor endowments and technologies. REMIND also represents the additional possibility of inter-temporal trade. This can be interpreted as capital trade or borrowing and lending.
	For each region, the value of exports must balance the value of imports within the time horizon of the model. This is ensured by the inter-temporal budget constraint, where πir is the present value price of good i.		For each region, the value of exports must balance the value of imports within the time horizon of the model. This is ensured by the inter-temporal budget constraint, where πir is the present value price of good i.

			<figure id="fig:REMIND_3.2.1 4">
	[[File:REMIND trade 2.JPG]]		[[File:REMIND trade 2.JPG]]
			</figure>

	In this equation discounting is implicit by using present value prices.		In this equation discounting is implicit by using present value prices.
	Inter-temporal trade and the capital mobility implied by trade in the composite good, cause prices of mobile factors to equalize, thus providing the basis for an inter-temporal and inter-regional equilibrium. Since no capital market distortions are considered, the interest rates equalize across regions. Similarly, permit prices equalize across regions, unless their trade is restricted. By contrast, final energy prices and wages can differ across regions because these factors are immobile. Prices for traded primary energy carriers differ according to the transportation costs.		Inter-temporal trade and the capital mobility implied by trade in the composite good, cause prices of mobile factors to equalize, thus providing the basis for an inter-temporal and inter-regional equilibrium. Since no capital market distortions are considered, the interest rates equalize across regions. Similarly, permit prices equalize across regions, unless their trade is restricted. By contrast, final energy prices and wages can differ across regions because these factors are immobile. Prices for traded primary energy carriers differ according to the transportation costs.

			<figure id="fig:REMIND_3.2.1 5">
	[[File:REMIND trade 3.JPG]]		[[File:REMIND trade 3.JPG]]
			</figure>

	Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. The inter-temporal budget constraints clear debts and assets that accrue through trade over time. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions. Trade of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.		Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. The inter-temporal budget constraints clear debts and assets that accrue through trade over time. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions. Trade of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.
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	'''Table 2.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.		'''Table 2.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.

			<figure id="fig:REMINDtable_2">
	[[File:REMIND trade 4.JPG]]		[[File:REMIND trade 4.JPG]]
			</figure>

Anselm Schultes at 15:46, 11 January 2017

2017-01-11T15:46:21Z

← Older revision		Revision as of 17:46, 11 January 2017
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	Two solution concepts for the treatment of trade exist, called Nash and Negishi approach. The Negishi approach includes trade balances of all goods explicitly and adjusts the welfare weights in order to guarantee that the intertemporal balance of payments of each region is settled. Prices are derived from the shadow prices of the trade balances in each iteration.		Two solution concepts for the treatment of trade exist, called Nash and Negishi approach. The Negishi approach includes trade balances of all goods explicitly and adjusts the welfare weights in order to guarantee that the intertemporal balance of payments of each region is settled. Prices are derived from the shadow prices of the trade balances in each iteration.
	In contrast, the Nash approach adjusts goods prices until demand and supply of traded goods are equalized. There are no explicit market clearning conditions, and regions optimize separately, facing their individual intertemporal balance of payments. In each iteration, the international prices are exogenous parameters for all regions.		In contrast, the Nash approach adjusts goods prices until demand and supply of traded goods are equalized. There are no explicit market clearning conditions, and regions optimize separately, facing their individual intertemporal balance of payments. In each iteration, the international prices are exogenous parameters for all regions.
			In the absence of inter-regional externalities, both solution approaches converge to the same solution.

	'''Table 2.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.		'''Table 2.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.

	[[File:REMIND trade 4.JPG]]		[[File:REMIND trade 4.JPG]]

Anselm Schultes at 15:45, 11 January 2017

2017-01-11T15:45:03Z

← Older revision		Revision as of 17:45, 11 January 2017
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	\|DocumentationCategory=Trade		\|DocumentationCategory=Trade
	}}		}}
	REMIND considers the trade of coal, gas, oil, biomass, uranium, the composite good (aggregated output of the macro-economic system), and emissions permits (in the case of climate policy). It assumes that renewable energy sources (other than biomass) and secondary energy carriers are non-tradable across regions. As an exception, REMIND can consider bilateral trade in electricity between specific region pairs (e.g., Europe and North Africa / Middle East), but this is not part of the default scenario. According to energy statistics, trade in refined liquid fuels does take place in the real world, but to a smaller extent than crude oil. Since REMIND considers crude oil trade, the liquid fuel trade only has a small share and is attributed to crude oil trade. To be consistent with trade statistics, ~~REMIND allocates the~~ trade in petroleum products to crude oil trade.		REMIND considers the trade of coal, gas, oil, biomass, uranium, the composite good (aggregated output of the macro-economic system), and emissions permits (in the case of climate policy). It assumes that renewable energy sources (other than biomass) and secondary energy carriers are non-tradable across regions. As an exception, REMIND can consider bilateral trade in electricity between specific region pairs (e.g., Europe and North Africa / Middle East), but this is not part of the default scenario. To be consistent with trade statistics, trade in petroleum products is subsumed under crude oil trade.

	~~Within the Negishi approach, for~~ each good i a global trade balance equation ensures that markets are cleared:		For each good i a global trade balance equation ensures that markets are cleared:

	[[File:REMIND trade 1.JPG]]		[[File:REMIND trade 1.JPG]]
Line 21:		Line 21:

	Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. The inter-temporal budget constraints clear debts and assets that accrue through trade over time. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions. Trade of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.		Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. The inter-temporal budget constraints clear debts and assets that accrue through trade over time. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions. Trade of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.
	~~The~~ treatment of trade ~~in REMIND depends on the solution concept (~~Nash ~~vs.~~ Negishi~~). The two approaches are in a dual relationship~~. The Negishi approach ~~considers the~~ trade balances of all goods explicitly and adjusts the welfare weights in order to guarantee that the intertemporal balance of payments of each region is settled. ~~REMIND derives~~ the prices of ~~traded goods from~~ the ~~optimal solution~~ in each iteration. ~~The~~ Nash approach adjusts goods prices until demand and supply of traded goods are equalized. In each iteration, the international prices are exogenous parameters for all regions~~. Furthermore, each region is subject to an intertemporal budget constraint, i.e. the intertemporal balance of payments has to be equal to zero~~.

			Two solution concepts for the treatment of trade exist, called Nash and Negishi approach. The Negishi approach includes trade balances of all goods explicitly and adjusts the welfare weights in order to guarantee that the intertemporal balance of payments of each region is settled. Prices are derived from the shadow prices of the trade balances in each iteration.
			In contrast, the Nash approach adjusts goods prices until demand and supply of traded goods are equalized. There are no explicit market clearning conditions, and regions optimize separately, facing their individual intertemporal balance of payments. In each iteration, the international prices are exogenous parameters for all regions.

	'''Table 2.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.		'''Table 2.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.

	[[File:REMIND trade 4.JPG]]		[[File:REMIND trade 4.JPG]]

Laura Delsa at 17:33, 20 November 2016

2016-11-20T17:33:00Z

← Older revision		Revision as of 19:33, 20 November 2016
Line 1:		Line 1:
	{{ModelDocumentationTemplate		{{ModelDocumentationTemplate
			\|IsEmpty=No
	\|IsDocumentationOf=REMIND		\|IsDocumentationOf=REMIND
	\|DocumentationCategory=Trade		\|DocumentationCategory=Trade
	}}		}}
	REMIND considers the trade of coal, gas, oil, biomass, uranium, the composite good (aggregated output of the macro-economic system), and emissions permits (in the case of climate policy). It assumes that renewable energy sources (other than biomass) and secondary energy carriers are non-tradable across regions. As an exception, REMIND can consider bilateral trade in electricity between specific region pairs (e.g., Europe and North Africa / Middle East). According to energy statistics, trade in refined liquid fuels does take place in the real world, but to a smaller extent than crude oil. Since REMIND considers crude oil trade, the liquid fuel trade only has a small share and is attributed to crude oil trade. To be consistent with trade statistics, REMIND allocates the trade in petroleum products to crude oil trade.		REMIND considers the trade of coal, gas, oil, biomass, uranium, the composite good (aggregated output of the macro-economic system), and emissions permits (in the case of climate policy). It assumes that renewable energy sources (other than biomass) and secondary energy carriers are non-tradable across regions. As an exception, REMIND can consider bilateral trade in electricity between specific region pairs (e.g., Europe and North Africa / Middle East), but this is not part of the default scenario. According to energy statistics, trade in refined liquid fuels does take place in the real world, but to a smaller extent than crude oil. Since REMIND considers crude oil trade, the liquid fuel trade only has a small share and is attributed to crude oil trade. To be consistent with trade statistics, REMIND allocates the trade in petroleum products to crude oil trade.

	~~For~~ each good i a global trade balance equation ensures that markets are cleared:		Within the Negishi approach, for each good i a global trade balance equation ensures that markets are cleared:

	[[File:REMIND trade 1.JPG]]		[[File:REMIND trade 1.JPG]]

	REMIND models regional trade via a common pool, with the exception of the bilateral ~~electrity~~ trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models (Heckscher et al. 1991), trade between regions is induced by differences in factor endowments and technologies. REMIND represents the additional possibility of inter-temporal trade. This ~~means that for~~ each region, the value of exports must balance the value of imports within the time horizon of the model. This is ensured by the inter-temporal budget constraint, where ~~[[File:REMIND_pi.JPG]]~~ is the present value price of good i.		REMIND models regional trade via a common pool, with the exception of the bilateral electricity trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models (Heckscher et al. 1991), trade between regions is induced by differences in factor endowments and technologies. REMIND also represents the additional possibility of inter-temporal trade. This can be interpreted as capital trade or borrowing and lending.
			For each region, the value of exports must balance the value of imports within the time horizon of the model. This is ensured by the inter-temporal budget constraint, where πir is the present value price of good i.

	[[File:REMIND trade 2.JPG]]		[[File:REMIND trade 2.JPG]]

	~~Therefore,~~ discounting is implicit. ~~Alternatively, this can be interpreted as capital trade or borrowing and lending.~~ Inter-temporal trade and the capital mobility implied by trade in the composite good, cause mobile ~~factor prices~~ to equalize, thus providing the basis for an inter-temporal and inter-regional equilibrium. Since no capital market distortions are considered, the interest rates equalize across regions. Similarly, permit prices equalize across regions, unless their trade is restricted. By contrast, final energy prices and wages can differ across regions because these factors are immobile. Prices for traded primary energy carriers differ according to the transportation costs.		In this equation discounting is implicit by using present value prices.
			Inter-temporal trade and the capital mobility implied by trade in the composite good, cause prices of mobile factors to equalize, thus providing the basis for an inter-temporal and inter-regional equilibrium. Since no capital market distortions are considered, the interest rates equalize across regions. Similarly, permit prices equalize across regions, unless their trade is restricted. By contrast, final energy prices and wages can differ across regions because these factors are immobile. Prices for traded primary energy carriers differ according to the transportation costs.

	[[File:REMIND trade 3.JPG]]		[[File:REMIND trade 3.JPG]]

	Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. ~~Budget constraints~~ inter-~~temporally balance~~ debts and assets that accrue through trade. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions.		Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. The inter-temporal budget constraints clear debts and assets that accrue through trade over time. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions. Trade of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.

	~~The trading~~ of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.

	The treatment of trade in REMIND depends on the solution concept (Nash vs. Negishi). The two approaches are in a dual relationship. The Negishi approach considers the trade balances of all goods explicitly and adjusts the welfare weights in order to guarantee that the intertemporal balance of payments of each region is settled. REMIND derives the prices of traded goods from the optimal solution in each iteration. The Nash approach adjusts goods prices until demand and supply of traded goods are equalized. In each iteration, the international prices are exogenous parameters for all regions. Furthermore, each region is subject to an intertemporal budget constraint, i.e. the intertemporal balance of payments has to be equal to zero.		The treatment of trade in REMIND depends on the solution concept (Nash vs. Negishi). The two approaches are in a dual relationship. The Negishi approach considers the trade balances of all goods explicitly and adjusts the welfare weights in order to guarantee that the intertemporal balance of payments of each region is settled. REMIND derives the prices of traded goods from the optimal solution in each iteration. The Nash approach adjusts goods prices until demand and supply of traded goods are equalized. In each iteration, the international prices are exogenous parameters for all regions. Furthermore, each region is subject to an intertemporal budget constraint, i.e. the intertemporal balance of payments has to be equal to zero.

	Table 3. Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.		'''Table 2.''' Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.

	[[File:REMIND trade 4.JPG]]		[[File:REMIND trade 4.JPG]]

Laura Delsa at 11:23, 17 October 2016

2016-10-17T11:23:23Z

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			REMIND considers the trade of coal, gas, oil, biomass, uranium, the composite good (aggregated output of the macro-economic system), and emissions permits (in the case of climate policy). It assumes that renewable energy sources (other than biomass) and secondary energy carriers are non-tradable across regions. As an exception, REMIND can consider bilateral trade in electricity between specific region pairs (e.g., Europe and North Africa / Middle East). According to energy statistics, trade in refined liquid fuels does take place in the real world, but to a smaller extent than crude oil. Since REMIND considers crude oil trade, the liquid fuel trade only has a small share and is attributed to crude oil trade. To be consistent with trade statistics, REMIND allocates the trade in petroleum products to crude oil trade.

			For each good i a global trade balance equation ensures that markets are cleared:

			[[File:REMIND trade 1.JPG]]

			REMIND models regional trade via a common pool, with the exception of the bilateral electrity trade mentioned above. While each region is an open system - meaning that it can import more than it exports - the global system is closed. The combination of regional budget constraints and international trade balances ensures that the sum of regional consumption, investments, and energy-system expenditures cannot be greater than the global total output in each period. In line with the classical Heckscher-Ohlin and Ricardian models (Heckscher et al. 1991), trade between regions is induced by differences in factor endowments and technologies. REMIND represents the additional possibility of inter-temporal trade. This means that for each region, the value of exports must balance the value of imports within the time horizon of the model. This is ensured by the inter-temporal budget constraint, where [[File:REMIND_pi.JPG]] is the present value price of good i.

			[[File:REMIND trade 2.JPG]]

			Therefore, discounting is implicit. Alternatively, this can be interpreted as capital trade or borrowing and lending. Inter-temporal trade and the capital mobility implied by trade in the composite good, cause mobile factor prices to equalize, thus providing the basis for an inter-temporal and inter-regional equilibrium. Since no capital market distortions are considered, the interest rates equalize across regions. Similarly, permit prices equalize across regions, unless their trade is restricted. By contrast, final energy prices and wages can differ across regions because these factors are immobile. Prices for traded primary energy carriers differ according to the transportation costs.

			[[File:REMIND trade 3.JPG]]

			Trade balances imply that the regional current accounts (and their counterparts - capital accounts) have a sum of zero at each point in time. In other words, regions with a current account surplus balance regions with a current account deficit. Budget constraints inter-temporally balance debts and assets that accrue through trade. This means that an export surplus qualifies the exporting region for an import surplus (of the same present value) in the future, thus also implying a loss of consumption for the current period. REMIND models trading of emissions permits in a similar way. In the presence of a global carbon market, the initial allocation of emissions rights is determined by a burden-sharing rule wherein permits can be freely traded among world regions. A permit-constraint equation ensures that an emissions certificate covers each unit of GHG emissions.

			The trading of resources is subject to trade costs. In terms of consumable generic goods, the representative households in REMIND are indifferent to domestic and foreign goods as well as foreign goods from different origins. This can potentially lead to a strong specialization pattern.

			The treatment of trade in REMIND depends on the solution concept (Nash vs. Negishi). The two approaches are in a dual relationship. The Negishi approach considers the trade balances of all goods explicitly and adjusts the welfare weights in order to guarantee that the intertemporal balance of payments of each region is settled. REMIND derives the prices of traded goods from the optimal solution in each iteration. The Nash approach adjusts goods prices until demand and supply of traded goods are equalized. In each iteration, the international prices are exogenous parameters for all regions. Furthermore, each region is subject to an intertemporal budget constraint, i.e. the intertemporal balance of payments has to be equal to zero.

			Table 3. Characterization of the treatment of trade in the two alternative Negishi and Nash solution concepts.

			[[File:REMIND trade 4.JPG]]