Macro-economic Modelling

Research Focus

The Macroeconomic Modeling Group of Research Domain III aims at the theoretical foundation, empirical validation and numerical implementation of an economic growth model that coupled with models of the energy system, climate system and land use system can be applied to assess climate policies.

Technological change and growth

Technological change is the main driving force of economic growth. Both have a major impact on the costs of mitigating climate change, while simultaneously climate policies induce technological change. Starting from endogenous growth theory, major research activities focus on modeling technological spillovers and investments into R&D.

International Trade

International trade is a major channel of interaction between agents (i.e. world regions) in our model. New concepts of dynamic trade theory have to be taken into account in order to deal with trade as a strategic variable in an intertemporal optimization framework. Moreover, capital trade, foreign investments and energy trade gain importance in the context of the restructuring of the energy systems worldwide.

Computational Economics

Major efforts are made in developing large scale integrated models. Handling complex models like REMIND-R is a challenging task. Advanced software and hardware tools are used to run REMIND-R numerically. Additional problems arise when external effects (e.g. spillovers) are modeled. Global optimality can not be guaranteed. In such a framework, a Social Planner optimum differs from a decentralized solution. Non-traditional algorithms have to be developed and used in order to find both types of solution.

Climate Policy Modeling

Major tools and products of the group’s activities are a regionalized version of the REMIND model family (i.e., REMIND-G, REMIND-R, REMIND-S). We further elaborate these models and apply them for climate policy analyses. Main focus is on the evaluation of Post-Kyoto climate policy regimes.