Production system and representation of economic sectors - TIAM-UCL
| Corresponding documentation | |
|---|---|
| Previous versions | |
| Model information | |
| Model link | |
| Institution | University College London (UCL), UK, https://www.ucl.ac.uk. |
| Solution concept | Partial equilibrium (price elastic demand) |
| Solution method | Linear optimisation |
| Anticipation | Perfect Foresight
(Stochastic and myopic runs are also possible) |
We have added a simplified general equilibrium macroeconomic growth module developed by Kypreos and Lehtila (2013). Macro Stand-Alone (MSA) is a single agent; single sector, multi-regional, general equilibrium optimal growth model which maximises discounted utility of a single consumer-producer agent. GDP is comprised of consumption, investment and energy system costs. Total economic production is determined by a combination of energy, capital and labour where energy substitutes with a capital-labour composite via an elasticity of substitution parameter. Quadratic cost functions and demand decoupling factors are estimated from the calibration routine are fed from TIAM-UCL to MSA. MSA is then solved and the new energy demands are given back into TIAM-UCL which is then solved again. The iteration continues until the model converges, defined by the change in energy service demand variation between interactions slowing to within a specified tolerance.