Huisstijltemplate voor overheadsheets prints

1

• Integration von RD-Entscheidungen
• Prototypisches CGE Modell
• Andreas Löschel
• Zentrum für Europäische Wirtschaftsforschung
  (ZEW)
• Mannheim
• Modellexperiment V, AT 5-5, Mannheim, 2.5.2005

2
Other studies..

• .. provide theoretical underpinnings of
  endogenous TC
• endogenous growth models e.g. Romer (90), Basu
  and Weil (98), Acemoglu (02)
• .. show importance of endogenous TC in climate
  change analyses
• empirical model studies e.g. Goulder Schneider
  (99), Sue Wing (03), Gerlagh Lise (03)
• Methodological extensions in MEX V
• Improved realism of modeling technological change
• Rate and direction of technological change

3
Stylized model set-up

• Stylized model structure
• Representative consumer
• Two final goods sectors (perfectly competitive)
• Two intermediate goods sectors (monopolistically
  competitive)
• Deterministic
• Intertemporal dynamic
• Up to 2030

4
Stylized model set-up

• RD (Innovation)
• Result of investment decision
• Yields blueprints for new varieties of knowledge
  capital , i.e. new products or processes (RD
  firms enter knowledge cap. markets for e.g.
  carbon intensive or not carbon intensive goods)
• Monopolistic competition (set-up costs)
• Stock of blueprints
• Diffusion
• Result of firms decision to adopt knowledge
  capital

5
Stylized model set-up

• Technology dynamics
• Knowledge spillovers to final goods sector
• Delayed feedback between these phases of
  TC(realistic representation of diffusion of the
  different types of knowledge cap.) LBD, LBU,
  network externalities, knowledge spillovers

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Stylized model set-up

• Representative consumer

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Stylized model set-up

• Producers

8
Stylized model set-up

• Knowledge capital

variety of knowledge capital
? 0
? 1
RD (blueprint)
physical capital
labor
9
Stylized model set-up

• Technology dynamics

10
Stylized model set up

• equilibrium bias in TCdirection of
  technological change relative profitability
  determines equilibrium bias
• Price effect (increases expected returns of
  improving productivity of relative scarce factors
  and hence of allocating more resources to RD
  activities that favor scarce factor)
• Market size effect (RD activities that favor
  abundand factor)
• Technology dynamics (state dependency)

11
Stylized model set up

• equilibrium bias in TC

12
Stylized model results

• Model calibrated to steady state of 2
• Simulations
• 25 fewer emission rights while both goods are
  complements
• e.g. electricity vs. electronic equipment
• 25 fewer emission rights while both goods are
  substitutes
• e.g. electricity from oil vs. electricity from
  wind
• allowing for feedback in TC

13
Stylized model results - complements
Complements bias towardscarbon intensive good
(scarce fct)(PE gt MSE)
14
Stylized model results - substitutes
Substitutes bias towardsnot carbon intensive
good (abundand fct)(MSE gt PE)
15
Stylized model results feedback (F)
16
Stylized model results utility
change from steady state
Year
simulation 1
simulation 3
steady state
17
Top-down model calibration

• Dutch economy in 1999
• IO table
• Detailed data on knowledge flows
• Account for knowledge flows in national
  accounting matrix (NAM)
• Identification
• Quantification
• Capitalization
• Adjust the NAM
• Parameter values

18
Top-down model calibration

• Account for knowledge flows in NAM
• Identification
• RD is registered as intermediate input
• Human capital is treated as intermediate input
• ICT infrastructure is treated as investment

19
Top-down model calibration
Adapted from Sue Wing (2003)
20
Top-down model calibration

• Account for knowledge flows in NAM
• Identification
• RD is registered as intermediate input
• Human capital is treated as intermediate input
• ICT infrastructure is treated as investment
• Quantification (Statistics Netherlands, 2004)
• Capitalization
• Additional column account
• registers industries investments in the stock of
  knowledge capital
• Additional row account
• registers the services that industries derive
  from this stock

21
Top-down model calibration
Adapted from Sue Wing (2003)
22
Top-down model calibration

• Account for knowledge flows in NAM
• Identification
• Quantification (Statistics Netherlands, 2004)
• Capitalization
• Additional column account
• registers industries investments in the stock of
  knowledge capital
• Additional row account
• registers the services that industries derive
  from this stock
• Debit investment column
• Debit intermediate goods matrix X
• assume that knowledge is embodied in tangible
  goods and services (Terleckji, 1974)
• assume that patents proxy knowledge (e.g.
  Verspagen and de Loo, 1999)

23
Top-down model calibration
Adapted from Sue Wing (2003)
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Top-down model calibration

• Adjust the NAM
• Assume that Dutch economy is already on a
  balanced growth path (BGP) in 1999
• Calculate investments in and returns to capital
  that are necessary to keep economy on BGP
• Physical capital
• Knowledge capital
• Balance the NAM
• Labor remuneration credited with final
  differences between row and column totals
• Parameter values obtained from various studies
• e.g. Coe and Helpman (1995), OECD (1996)