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The Transition to Endogenous Technical Change in Climate-Economy Models: A Technical Overview to the Innovation Modeling Comparison Project

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  • Köhler Jonathan
  • Michael Grubb
  • David Popp
  • Ottmar Edenhofer

Abstract

This paper assesses endogenous technical change (ETC) in climate-economy models, using the models in the Innovation Modeling Comparison Project (IMCP) as a representative cross-section. ETC is now a feature of most leading models. Following the new endogenous growth literature and the application of learning curves to the energy sector, there are two main concepts employed: knowledge capital and learning curves. The common insight is that technical change is driven by the development of knowledge capital and its characteristics of being partly non-rival and partly non-excludable. There are various different implementations of ETC. Recursive CGE models face particular difficulties in incorporating ETC and increasing returns. The main limitations of current models are: the lack of uncertainty analysis; the limited representation of the diffusion of technology; and the homogeneous nature of agents in the models including the lack of representation of institutional structures in the innovation process.

Suggested Citation

  • Köhler Jonathan & Michael Grubb & David Popp & Ottmar Edenhofer, 2006. "The Transition to Endogenous Technical Change in Climate-Economy Models: A Technical Overview to the Innovation Modeling Comparison Project," The Energy Journal, , vol. 27(1_suppl), pages 17-56, January.
    • Handle: RePEc:sae:enejou:v:27:y:2006:i:1_suppl:p:17-56
    DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI1-2
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    More about this item

    Keywords

    Endogenous technological change; Climate-economy models; Model comparison; IMCP;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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