Transitions to a Sustainable Future
Edited by Valentina Bosetti, Reyer Gerlagh and Stefan P. Schleicher
Chapter 14: Policy Analysis Based on Computable Equilibrium (PACE)
Modelling Sustainable Development 30/04/2009 17.05 Chap. 14 p. 202 14. Policy Analysis Based on Computable Equilibrium (PACE) Christoph Böhringer, Andreas Löschel and Thomas F. Rutherford 14.1 OVERVIEW PACE (Policy Analysis based on Computable Equilibrium) is a flexible system of computable general equilibrium (CGE) models which integrates the areas of economy, energy and environment. The generic core of PACE is a standard multisector, multiregion CGE framework of global trade and energy use designated to assess major policy initiatives in a world that is increasingly integrated through trade. Departing from the generic core, the various PACE modules allow for the problem-specific analysis of policy interference at different regional and sectoral levels as well as time treatments (static, dynamic-recursive, intertemporal). The different PACE modules account for issue-driven priorities in the representation of details and functional relationships. There is a module that emphasizes discrete technological choice in the energy system thereby featuring a bottom-up representation of alternative electricity supply options. Another module incorporates a detailed description of labor market imperfections and public taxation to trace back the interaction of tax policies and involuntary unemployment (for example due to union-bargaining). Further modules include a disaggregate representation of different household types or overlapping generations in order to allow for more detailed incidence analysis or a vintage approach to car stocks in order to investigate the implications of alternative emission regulation policies for automobile industries. More recently, an integrated assessment module has been added that links a reduced-form representation of climate relationships with a comprehensive...
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