Macro-economic Modeling

Research topics

The Macroeconomic Modeling Group of Research Domain III aims at the theoretical foundation, empirical validation and numerical implementation of an economic growth model. This model is part of an Integrated Assessment Model that combines models of the macro economy, the energy system, the climate system and the land use system. The Integrated Assessment Model 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 international technological spillovers and 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.

The team

	Marian Leimbach         (team leader)					Nico Bauer (2nd team leader)
	Lavinia Baumstark					Michael Hübler
	Franziska Piontek					Teresa Lenz

Selected publications

• Hübler, M.,  Baumstark, L., Leimbach, M., Bauer, N., Edenhofer, O. (2011). An Integrated Assessment  Model with Endogenous Growth. Working paper, 35 pp.
• Hübler, M. (2011). Technology Diffusion under Contraction and Convergence: A CGE Analysis of China. Energy Economics, Elsevier, 33(1), 131-142.
• Lüken, M., O. Edenhofer, B. Knopf, M. Leimbach, G. Luderer, N. Bauer (2010). The Role of Technological Availability for the Distributive Impacts of Climate Change Mitigation Policy. Working Paper, 29 pp.
• Lüken, M., O. Edenhofer, M. Leimbach, N. Bauer (2010). Fossil Energy Trade and Regional Mitigation Costs: The Effect of Trade Costs. Working Paper, 27 pp.
• Leimbach, M., N. Bauer, L. Baumstark, M. Lüken, O. Edenhofer (2010). Technological Change and International Trade: Insights from REMIND-R. The Energy Journal 31, Special Issue, 109-136.
• Leimbach, M., N. Bauer, L. Baumstark, O. Edenhofer (2010). Mitigation costs in a globalized world: climate policy analysis with REMIND-R. Environmental Modeling and Assessment 15, 155-173.
• Edenhofer, O., B. Knopf, M. Leimbach, N. Bauer (2010). ADAM's Modeling Comparison Project - Intensions and Prospects. The Energy Journal 31, Special Issue, 7-10.
• Leimbach, M., K. Eisenack (2009): A Trade algorithm for Multi-region Models Subject to Spillover Externalities. Computational Economics, 33, 107-130.
• Bauer, N., O. Edenhofer, M. Leimbach (2009). Low-stabilisation scenarios and technologies for carbon capture and sequestration. Energy Procedia 1(1), 4031-4038.
• Knopf, B., O. Edenhofer, T. Barker, N. Bauer, L. Baumstark, B. Chateau, P. Criqui, A. Held, M. Isaac, M. Jakob, E. Jochem, A. Kitous, S. Kypreos, M. Leimbach, B. Magné, S. Mima, W. Schade, S. Scrieciu, H. Turton, D. van Vuuren (2009). The economics of low stabilisation: implications for technological change and policy. In: M. Hulme, H. Neufeldt (eds.). Making climate change work for us ADAM synthesis book, Cambridge University Press.
• Leimbach, M., L. Baumstark (Forthcoming). The impact of capital trade and technological spillovers on climate policies. Ecological Economics, Elsevier.
  
• Kretschmer, B., Hübler, M., Nunnenkamp, P. (Forthcoming).  Does Foreign Aid Reduce Energy and Carbon Intensities of Developing Economies? Journal of International Development, Wiley Online Library.
• Hübler, M., Lontzek, T. (Forthcoming). Socially Optimal North-South Capital Transfer and Technology Diffusion.  The Journal of International Trade and Economic Development, Routledge, Taylor & Francis Group.
• Hübler, M. (Forthcoming). Avoiding the Trap: The Dynamic Interaction of North–South Capital Mobility and Technology Diffusion. The Journal of International Trade and Economic Development, Routledge, Taylor & Francis Group.

Selected projects

• No. 9179 - EntDekEn

Title: Klimaschutz, Entwicklung und Gerechtigkeit: Dekarbonisierung in Entwicklungs- und Schwellenländern

Duration: August 2010 until July 2013

Budget: 500.000 € funded by BMBF

Description: Climate change and the fight against global poverty are two challenges for this century that cannot be seen separately. The challenge is find solutions between promoting economic growth (and thus burdening the climate) on the one hand, and forgoing economic growth (and thus burdening the poor) on the other. To meet this challenge new pathways for low carbon development will be identified.

• No. 9211 - RoSE

Title: Roadmaps towards Sustainable Energy Futures

Duration: January 2010 until December 2012

Budget: total of 1,170.000 € (545.000 € for PIK) funded by the Mercator Foundation

Description: In cooperation with FEEM in Italy, JGCR Institute in the USA, ERI and the Tsinghua University in China PIK scientists set up a model-based analysis of the economy of climate policies targeting at carbon dioxid stabilization at 450 and 550 ppm. The aim of this project is to provide a portfolio of roadmaps for establishing sustainable energy systems that also shows options for ambitious aims in climate policy.

• No. 9418 - RECIPE

Title: Report on Energy and Climate Policies in Europe

Duration: October 2007 until September 2009

Budget: total of 500.000 € funded by Allianz and WWF

Description: In this project PIK and it´s project partners CIRED and CMCC are working on a European Stern Review. RECIPE investigates the energy and climate policies necessary to reach the 2-degree-target. Policy instruments, investment options and necessary steps for the critical industries are being investigated.

•  No. 9652 - ADAM

(Work package Mitigation 2 (WP M2, P3a, P3c))

Title: ADAM - Adaptation and Mitigation Strategies: Supporting European Climate Policy

Duration: March 2006 until February 2009

Budget: 700.000 € (for Work packages M2, P3a & P3c only) funded by EU, 6th Framework Programme

Description: ADAM is an international project with 26 partner institutes involved. It is coordinated by the Tyndall Centre in Norwich, UK, and funded under the 6th Framework Programme of the European Commission. ADAM will lead to a better understanding of the trade-offs and conflicts that exist between adaptation and mitigation policies. It will support EU policy development in the next stage of the development of the Kyoto Protocol and will support the emergence of new adaptation strategies for Europe. Work Package M2 (Mitigation at the Global Level) is one of 7 work packages within ADAM and is led by Dr. Ottmar Edenhofer. It aims at assessing the mitigation options of post-2012 EU and global climate policies. PIK publications from the ADAM project can be downloaded here.