A Successful Assessment of the Economic Impacts of Ecological Transition Policies in the EU Requires the European Commission to Broaden the Range of Its Modelling Tools

Abstract

This paper presents a nuanced exploration of the current economic models used by the European Commission, highlighting their required complements in the context of ecological transition policies in the European Union, such as the European Green Deal. It emphasises the need for and value of incorporating a broader range of complementary modelling tools and models that illuminate aspects often abstracted in conventional approaches. This would permit to anticipate more adequately the impacts of the environmental crisis, environmental policies and transition strategies, and to assess their economic consequences. The authors discuss the theoretical and operational challenges faced by current models (New Keynesian DSGE and EEE-CGE types) and suggest alternative empirical modelling approaches developed in academic and public institutions. The aim of this work is both to provide an exhaustive review of complementary operational models in collaboration with their research teams, and to prioritise model development and guide discussions towards more effective policy recommendations. By integrating additional and complementary models having comparative advantages in addressing specific policy questions, this paper argues that the inventory of modelling tools of the European Commission could be enhanced. This paper makes a case for a more diversified, holistic and robust approach to economic modelling, to make them more capable of supporting the design of efficient, feasible, fair and socially acceptable ecological transition strategies. It also calls for an institutional convergence and interdisciplinary dialogue between modelling teams to improve tools and to provide effective and systemic guidance to policymakers in the EU.

Keywords: Ecological Transition Policies, European Green Deal, Economic Modelling, Ecological Economics, Integrated Assessment, Policy Analysis, Model Diversification

JEL Classification: C68, E17, E61, B50, Q54, Q58