Economic activity - EPPA: Difference between revisions

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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.
The social-economic drivers of EPPA also include a set of endogenously determined variables, which consist of savings, investment, resource depletion of fossil fuels, and the evolution of technology specific factor (a.k.a. fixed factor) supply for each backstop technology. Savings provide funds for investment, which increases the output of the following period. On the other hand, the use of fossil fuels in the current period decreases the resources available for future consumption. In addition, EPPA considers the technology specific factor to model the introduction of a backstop technology. The limited supply of the factor at the beginning captures the phenomenon that costs of operating a new technology tend to be higher when the technology is at the early stage of introduction, but the costs may go down gradually with learning-by-doing, knowledge accumulation, etc. The parameterization of technology specific factors is based on empirical evidence presented in Morris et al. (2019) <ref>Morris, J.F., J.M. Reilly and Y-H. H. Chen (2019). “Advanced Technologies in Energy-Economy Models for Climate Change Assessment.” Energy Economics, 80 (476-490) (doi: 10.1016/j.eneco.2019.01.034).</ref>.


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Latest revision as of 18:14, 12 July 2022

The social-economic drivers of EPPA also include a set of endogenously determined variables, which consist of savings, investment, resource depletion of fossil fuels, and the evolution of technology specific factor (a.k.a. fixed factor) supply for each backstop technology. Savings provide funds for investment, which increases the output of the following period. On the other hand, the use of fossil fuels in the current period decreases the resources available for future consumption. In addition, EPPA considers the technology specific factor to model the introduction of a backstop technology. The limited supply of the factor at the beginning captures the phenomenon that costs of operating a new technology tend to be higher when the technology is at the early stage of introduction, but the costs may go down gradually with learning-by-doing, knowledge accumulation, etc. The parameterization of technology specific factors is based on empirical evidence presented in Morris et al. (2019) [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. ↑ Morris, J.F., J.M. Reilly and Y-H. H. Chen (2019). “Advanced Technologies in Energy-Economy Models for Climate Change Assessment.” Energy Economics, 80 (476-490) (doi: 10.1016/j.eneco.2019.01.034).
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