A forward calibration method for analyzing energy policy in new quantitative trade models

Frank Pothen and Michael Hübler

Energy Economics, 2021, vol. 100, issue C

Abstract: This article introduces a dynamic forward calibration method for New Quantitative Trade models, particularly a disaggregated Eaton and Kortum model, within a global computable general equilibrium framework. The model is parameterized based on distinct, consistent future development scenarios of the (Northwest) German energy transition with productivity growth and structural change derived through a complex scenario-creation process. The future development scenarios significantly affect European economies, particularly via the EU climate policy costs that significantly increase towards 2050. If (Northwest) Germany's energy transition fails, then its climate policy costs will increase extraordinarily. Structural change, energy efficiency improvements and nearly 100% electricity from renewables drastically reduce the costs.

Keywords: Energy transition; Forward calibration; Regional model; Structural estimation; New quantitative trade theory (search for similar items in EconPapers)
JEL-codes: C68 F17 L16 O40 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:100:y:2021:i:c:s0140988321002589

DOI: 10.1016/j.eneco.2021.105352

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