The Synthesis of Bottom-Up and Top-Down Approaches to Climate Policy Modeling: Electric Power Technologies and the Cost of Limiting U.S. CO2 Emissions

Ian Sue Wing ()
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Ian Sue Wing: Geography Boston University

No 21, Computing in Economics and Finance 2005 from Society for Computational Economics

Abstract: In the U.S., the bulk of CO2 abatement induced by carbon taxes comes from electric power. This paper incorporates technology detail into the electricity sector of a computable general equilibrium model of the U.S. economy to characterize electric power’s technological margins of adjustment to carbon taxes and to elucidate their general equilibrium effects. Compared to the top-down production function representation of the electricity sector, the technology-rich bottom-up specification produces less abatement at a higher welfare cost, suggesting that bottom-up models do not necessarily generate lower costs of abatement than top-down models. This result is shown to be sensitive to the elasticity with which technologies’ generating capacities adjust to relative prices

JEL-codes: C68 (search for similar items in EconPapers)
Date: 2005-11-11
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