Modeling Biased Technical Change. Implications for Climate Policy

Enrica De Cian (), Carlo Carraro () and Lea Nicita
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Lea Nicita: Fondazione Eni Enrico Mattei

No 2010.4, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Climate-economy models aiming at quantifying the costs and effects of climate change impacts and policies have become important tools for climate policy decision-making. Although there are several important dimensions along which models differ, this paper focuses on a key component of climate change economics and policy, namely technical change. This paper tackles the issues of whether technical change is biased towards the energy sectors, the importance of the elasticity of substitution between factors in determining this bias and how mitigation policy is likely to affect it. The analysis is performed using the World Induced Technical Change model, WITCH. Three different versions of the model are proposed. The starting set-up includes endogenous technical change only in the energy sector. A second version introduces endogenous technical change in both the energy and non-energy sectors. A third version of the model embodies different sources of technical change, namely R&D and human capital. Although different formulations of endogenous technical change have only a minor influence on climate policy costs, the macroeconomic effects on knowledge and human capital formation can vary greatly.

Keywords: Technical Change; Climate Policy; Stabilization Cost (search for similar items in EconPapers)
JEL-codes: C72 H23 Q25 Q28 (search for similar items in EconPapers)
Date: 2010-01
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Modeling Biased Technical Change. Implications for Climate Policy (2010)
Working Paper: Modeling Biased Technical Change. Implications For Climate Policy (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2010.4

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