A review of macroeconomic models for the WEFE nexus assessment

46 Pages Posted: 30 Nov 2022

See all articles by Chiara Castelli

Chiara Castelli

affiliation not provided to SSRN

Marta Castellini

University of Padua - Department of Economics and Management; Fondazione Eni Enrico Mattei (FEEM), Milan

Emanuele Ciola

Fondazione Eni Enrico Mattei (FEEM), Milan; University of Brescia - Department of Economics and Management

Camilla Gusperti

Fondazione Eni Enrico Mattei (FEEM)

Ilenia G. Romani

Fondazione Eni Enrico Mattei

Sergio Vergalli

University of Brescia - Department of Economics; Fondazione Eni Enrico Mattei (FEEM), Milan

Date Written: November 28, 2022

Abstract

The Water, Energy, Food and Ecosystems (WEFE) nexus refers to the system of complex and highly non-linear interconnections between these four elements. It now represents the basic framework to assess and design policies characterized by an holistic environmental end economical perspective. In this work, we provide a systematic review of the macroeconomic models investigating its components as well as combinations of them and their interlinkages with the economic system. We focus on four different types of macroeconomic models: Computable General Equilibrium (CGE) models, Integrated Assessment Models (IAMs), Agent-based Models (ABMs), and Dynamic Stochastic General Equilibrium (DSGE) models. On the basis of our review, we find that the structure of IAMs is currently the most used to represent the nexus complexity, while DSGE models focus only on single components but appear to be better suited to account for the randomization of exogenous shocks. CGE models and ABMs could be more effective on the side of the policy perspective. Indeed, the former can account for interlinkages across sectors and countries, while the latter can define theoretical frameworks that better approximate reality.

Keywords: Agent-based, Computable general equilibrium, Dynamic stochastic general equilibrium, Integrated assessment, Macroeconomic models, Water-energy-food ecosystems nexus

JEL Classification: Q18, Q25, Q43, Q54, Q57

Suggested Citation

Castelli, Chiara and Castellini, Marta and Ciola, Emanuele and Gusperti, Camilla and Romani, Ilenia G. and Vergalli, Sergio, A review of macroeconomic models for the WEFE nexus assessment (November 28, 2022). FEEM Working Paper No. 35, Available at SSRN: https://ssrn.com/abstract=4288447 or http://dx.doi.org/10.2139/ssrn.4288447

Chiara Castelli

affiliation not provided to SSRN

Marta Castellini (Contact Author)

University of Padua - Department of Economics and Management ( email )

Via del Santo, 33
Padova, 35123
Italy

HOME PAGE: http://https://linktr.ee/martacastellini

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan
Italy

HOME PAGE: http://https://linktr.ee/martacastellini

Emanuele Ciola

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan
Italy

University of Brescia - Department of Economics and Management ( email )

Contrada Santa Chiara 50
BRESCIA, BS 25122
Italy

Camilla Gusperti

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

Ilenia G. Romani

Fondazione Eni Enrico Mattei

Italy

Sergio Vergalli

University of Brescia - Department of Economics ( email )

Via San Faustino 74B
Brescia, 25122
Italy

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan
Italy

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