GTAP Resources: Resource Display
| GTAP Resource #7185 |
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"An Analysis for Carbon Constraint Modeling" by Chen, Y.-H. Henry Abstract In computable general equilibrium modeling, a common strategy for simulating carbon constraint scenarios is to revise the fossil fuel input of the cost function so that the fossil fuel expenditure and carbon penalty are combined together with a new sub-nest of constant elasticity of substitution function, usually in a Leontief fashion. A critical drawback for this approach is that when the carbon price is low or equal to zero, using the aggregation for the fuel and carbon credit combo can indeed increase the simulated emissions relative to a no-policy case, although the issue is indiscernible when the carbon price gets higher. The study provides a theoretical framework explaining this peculiar observation. It then presents a new modeling approach that resolves the issue. The proposed strategy can be applied on any non-negative carbon price that is given, or on any emissions target level that is either binding or not, without erroneously increasing emissions relative to the no-policy level. A modeling exercise is offered as well for demonstration purposes. |
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- Climate change policy - Advances in quantitative methods - Asia (East) |
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Public Access  Paper (920.5 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 1:05:45 PM
