Macro-economy - EPPA: Difference between revisions

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The key socio-economic driver of EPPA is the Hick’s neutral productivity growth, which is calibrated to match a baseline GDP growth trajectory under 1) a set of exogenously given factors, including labor endowment growth, which is assumed to increase proportionally to the population growth and autonomous energy efficiency improvement (AEEI), and 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 <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>.
Each period of EPPA forms an Arrow-Debreu type of model that is the basis of the general equilibrium theory. The recursive structure connects periods together through the evolution of endowments (see model scope and methods). Since the main application of EPPA is to provide long-term projections under some counterfactual scenarios rather than short-term business fluctuations, the model only focuses on the real variables of economies without considering the monetary markets and financial instruments.


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{{ModelDocumentationTemplate

Latest revision as of 17:49, 4 August 2022

Each period of EPPA forms an Arrow-Debreu type of model that is the basis of the general equilibrium theory. The recursive structure connects periods together through the evolution of endowments (see model scope and methods). Since the main application of EPPA is to provide long-term projections under some counterfactual scenarios rather than short-term business fluctuations, the model only focuses on the real variables of economies without considering the monetary markets and financial instruments.

Alert-warning.png Note: The documentation of EPPA is 'in preparation' and is not yet 'published'!

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
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