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Imperfect Markets and the Properties of Macro-Economic-Environmental Models as Tools for Policy Evaluation

Author

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  • Bernd Meyer

    (GWS - Institute of Economic Structures Research)

  • Gerd Ahlert

    (GWS - Institute of Economic Structures Research)

Abstract

Computable General Equilibrium Models and Macro-Econometric Models are deeply disaggregated macro-economic systems, which are used in economic environmental studies to explain the emissions of pollutions and the extraction of resources. CGE models are based on neoclassical theory depicting equilibrium of perfectly competitive markets, whereas the macro-econometric models – better characterized as neokeynesian – have been developed from a critical position vis-a-vis neoclassical theory stressing the importance of market imperfections. The paper at hand shows that this fundamental difference in approach to a large extent is responsible for differences in modelling results concerning the impact of policy instruments on the economy, social relations and the environment. Furthermore the outcome of concrete model applications is affected by differences in both the construction of the references and the concrete implementation of the policy instruments in the models.

Suggested Citation

  • Bernd Meyer & Gerd Ahlert, 2016. "Imperfect Markets and the Properties of Macro-Economic-Environmental Models as Tools for Policy Evaluation," GWS Discussion Paper Series 16-9, GWS - Institute of Economic Structures Research.
    • Handle: RePEc:gws:dpaper:16-9
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    More about this item

    Keywords

    Integrated Assessment Modelling; CGE models; Macro-Econometric Models; Neoclassical Theory; Neokeynesian Theory;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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