An Integrated Assessment Model with Endogenous Growth

44 Pages Posted: 5 Sep 2012

See all articles by Michael Hübler

Michael Hübler

Leibniz Universität Hannover

Lavinia Baumstark

Potsdam-Institut für Klimafolgenforschung (PIK)

Marian Leimbach

Potsdam Institute for Climate Impact Research (PIK)

Ottmar Edenhofer

Potsdam Institute for Climate Impact Research (PIK); Mercator Research Institute on Global Commons and Climate Change (MCC); Technische Universität Berlin (TU Berlin)

Nico Bauer

Potsdam Institute for Climate Impact Research PIK; Paul Scherrer Insitute PSI; Fondazione ENI Enrico Mattei FEEM

Date Written: 2012

Abstract

We introduce endogenous directed technical change into numerical integrated climate and development policy assessment. We distinguish expenditures on innovation (R&D) and imitation (international technology spillovers) and consider the role of capital investment in creating and implementing new technologies. Our main contribution is to calibrate and numerically solve the model and to examine the model’s sensitivity. As an application, we assess a carbon budget-based climate policy and vary the beginning of energy-saving technology transfer. Accordingly, China is a main beneficiary of early technology transfer. Herein, our results highlight the importance of timely international technology transfer for efficiently meeting global emission targets. Most of the consumption gains from endogenous growth are captured in the baseline. Moreover, mitigation costs turn out to be insensitive to changes in most of the parameters of endogenous growth. A higher effectivity of energy-specific relative to labor-specific expenditures on innovation and imitation reduces mitigation costs, though.

Keywords: endogenous growth, directed technical change, technology transfer, integrated assessment, carbon budget, China

JEL Classification: O11, O30, O44, O47, Q32

Suggested Citation

Hübler, Michael and Baumstark, Lavinia and Leimbach, Marian and Edenhofer, Ottmar and Bauer, Nico, An Integrated Assessment Model with Endogenous Growth (2012). ZEW - Centre for European Economic Research Discussion Paper No. 12-054, Available at SSRN: https://ssrn.com/abstract=2141927 or http://dx.doi.org/10.2139/ssrn.2141927

Michael Hübler (Contact Author)

Leibniz Universität Hannover ( email )

Institute f. Environm. Economics and World Trade
Koenigsworther Platz 1
30167 Hannover, DE 30167
Germany

Lavinia Baumstark

Potsdam-Institut für Klimafolgenforschung (PIK) ( email )

Telegraphenberg
Potsdam, Brandenburg 14412
Germany

Marian Leimbach

Potsdam Institute for Climate Impact Research (PIK) ( email )

P.O. Box 601203
14412 Potsdam, Brandenburg
Germany

Ottmar Edenhofer

Potsdam Institute for Climate Impact Research (PIK) ( email )

P.O. Box 601203
14412 Potsdam, Brandenburg
Germany

Mercator Research Institute on Global Commons and Climate Change (MCC)

Torgauer Straße 12-15
Berlin, 10829
Germany

Technische Universität Berlin (TU Berlin)

Straße des 17
Juni 135
Berlin, 10623
Germany

Nico Bauer

Potsdam Institute for Climate Impact Research PIK ( email )

Telegraphenberg
Potsdam, Brandenburg 14412
Germany

Paul Scherrer Insitute PSI ( email )

5232 Villigen PSI
Switzerland

Fondazione ENI Enrico Mattei FEEM ( email )

Corso Magenta 63
20123 Milan
Italy

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