Model scope and methods - GEM-E3

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Model Documentation - GEM-E3
Corresponding documentation
Model information
Institution Institute of Communication And Computer Systems (ICCS)
Concept General equilibrium
Solution method The model is formulated as a simultaneous system of equations with an equal number of variables. The system is solved for each year following a time-forward path. The model uses the GAMS software and is written as a mixed non-linear complementarity problem solved by using the PATH algorithm using the standard solver options.
Anticipation Myopic

The General Equilibrium Model for Economy-Energy-Environment (GEM-E3) is a multi-regional, multi-sectoral, recursive dynamic computable general equilibrium (CGE) model which provides details on the macro-economy and its interaction with the environment and the energy system. It is an empirical, large scale model written entirely in structural form.

GEM-E3 incorporates micro-economic mechanisms and institutional features within a consistent macro-economic framework and avoids the representation of behaviour in reduced form. The GEM-E3 model includes projections of: full Input-Output tables by country/region, national accounts, employment, balance of payments, public finance and revenues, household consumption, energy use and supply, GHG emissions and atmospheric pollutants.

The model features perfect competition market regimes, discrete representation of power producing technologies, semi-endogenous learning by doing effects, equilibrium unemployment, option to introduce energy efficiency standards, formulates emission permits for GHG and atmospheric pollutants. The environmental module includes flexibility instruments allowing for a variety of options when simulating emission abatement policies, including: different allocation schemes (grandfathering, auctioning, etc.), user-defined bubbles for traders, various systems of exemptions, various systems for revenue recycling, etc.