Modelling the Evolution of Economic Structure and Climate Change: A Review

38 Pages Posted: 24 Oct 2018

See all articles by Tommaso Ciarli

Tommaso Ciarli

SPRU, University of Sussex

Maria Savona

University of Sussex

Date Written: January 2019

Abstract

We discuss how different models assessing climate change integrate aspects of structural change that are crucial to improve understanding of the relation between changes in the environment and in the economy. We identify six related aspects of structural change, which have significant impact on climate change: sectoral composition, industrial organisation, technology, employment, final demand, and institutions. Economic models vary substantially with respect to the aspects of structural change that they include, and how they model them. We review different modelling families and compare these differences: integrated assessment models (IAM), computable general equilibrium (CGE) models, structural change models (SCM), ecological macroeconomics models in the Keynesian tradition (EMK) and evolutionary agent based models (EABM). We find that IAM and CGE address few of the aspects of structural change identified; SCM focus on the sectoral composition; and EKM study final demand and employment structure. But all these models are aggregate and omit the complexity of the interactions between structural and climate change. EABM have explored a larger number of aspects of structural change, modelling their emergence from the interaction of microeconomic actors, but have not yet exploited their potential to study the interactions among interrelated aspects of structural and climate change.

Keywords: structural change, climate change, economic modelling

Suggested Citation

Ciarli, Tommaso and Savona, Maria, Modelling the Evolution of Economic Structure and Climate Change: A Review (January 2019). SWPS 2019-01. Available at SSRN: https://ssrn.com/abstract=3319852 or http://dx.doi.org/10.2139/ssrn.3319852

Tommaso Ciarli (Contact Author)

SPRU, University of Sussex ( email )

Jubilee Building
University of Sussex
Falmer, Brighton, Sussex BN1 9SL
United Kingdom

Maria Savona

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

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