Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model

Francesco Lamperti, Giovanni Dosi, Mauro Napoletano, Andrea Roventini and Alessandro Sapio
Additional contact information
Francesco Lamperti: UP1 - Université Paris 1 Panthéon-Sorbonne
Alessandro Sapio: PARTHENOPE - Università degli Studi di Napoli “Parthenope” = University of Naples

SciencePo Working papers Main from HAL

Abstract: In this work we develop an agent-based model that offers an alternative to standard, computable general equilibrium integrated assessment models (IAMs). The Dystopian Schumpeter meeting Keynes (DSK) model is composed of heterogeneous firms belonging to capital-good, consumption-good and energy sectors. Production and energy generation lead to greenhouse gas emissions, which affect temperature dynamics. Climate damages are modelled at the individual level as stochastic shocks hitting workers' labour productivity, energy efficiency, capital stock and inventories of firms. In that, aggregate damages emerge from the aggregation of losses suffered by heterogeneous, interacting and boundedly rational agents. The model is run focusing on a business-as-usual carbon-intensive scenario consistent with a Representative Concentration Pathway 8.5. We find that the DSK model is able to account for a wide ensemble of micro- and macro-empirical regularities concerning both economic and climate dynamics. Simulation experiments show a substantial lack of isomorphism between the effects of micro- and macro-level shocks, as it is typical in complex system models. In particular, different types of shocks have heterogeneous impact on output growth, unemployment rate, and the likelihood of economic crises, pointing to the importance of the different economic channel affected by the shock. Overall, we report much larger climate damages than those projected by standard IAMs under comparable scenarios, suggesting possible shifts in the growth dynamics, from a self-sustained pattern to stagnation and high volatility, and the need of urgent policy interventions.

Keywords: Climate change; Agent-based models; Integrated assessment; Macro-economic dynamics; Climate damages (search for similar items in EconPapers)
Date: 2018-03
References: Add references at CitEc
Citations: View citations in EconPapers (20)

Published in Ecological Economics, 2018, 150, pp.315 - 339. ⟨10.1016/j.ecolecon.2018.03.023⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model (2018)
Working Paper: Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model (2018)
Working Paper: Faraway, so close: coupled climate and economic dynamics in an agent based integrated assessment model (2017)
Working Paper: Faraway, so close: coupled climate and economic dynamics in an agent-based integrated assessment model (2017)
Working Paper: Faraway, so close: coupled climate and economic dynamics in an agent-based integrated assessment model (2017)
Working Paper: Faraway, so Close: Coupled Climate and Economic Dynamics in an Agent-Based Integrated Assessment Model (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03399637

DOI: 10.1016/j.ecolecon.2018.03.023

Access Statistics for this paper

More papers in SciencePo Working papers Main from HAL
Bibliographic data for series maintained by Contact - Sciences Po Departement of Economics ().