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Combining Energy Technology Dynamics and Macroeconometrics: The E3MG Model

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  • Jonathan Köhler
  • Terry Barker
  • Dennis Anderson
  • Haoran Pan

Abstract

This paper introduces a novel approach to the hybrid modelling of technological change climate stabilisation cost literature. We describe how a post-Keynesian macroeconomic model of sectoral demand, E3MG, has been combined with investments in 26 energy technologies from a submodel, ETM. E3MG is a 20-region global energy-environment-economy (E3) econometric, dynamic simulation model. It is a component of the UK Tyndall Center’s Community Integrated Assessment System. Technological change is endogenous, through its effects on general energy use and sectoral demand, and on energy technologies through the cost-reducing effects o f learning by doing and economies of scale. This approach directly challenges the notion that historically estimated models cannot be use for long-term analysis. The paper concludes with an account of how technological progress is induced in this hybrid system by high relative prices of carbon designed to achieve climate stabilization at 450ppmv.

Suggested Citation

  • Jonathan Köhler & Terry Barker & Dennis Anderson & Haoran Pan, 2006. "Combining Energy Technology Dynamics and Macroeconometrics: The E3MG Model," The Energy Journal, , vol. 27(2_suppl), pages 113-133, June.
    • Handle: RePEc:sae:enejou:v:27:y:2006:i:2_suppl:p:113-133
    DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI2-6
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    1. Colin Hargreaves (ed.), 1992. "Macroeconomic Modelling Of The Long Run," Books, Edward Elgar Publishing, number 207.
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