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| van der Werf, Edwin. |
| Quantitative models for climate policy modeling differ in the production structure used and in the sizes of the elasticities of substitution. The empirical foundation for both is generally lacking. This paper estimates the parameters of two-level CES production functions with capital, labour and energy as inputs, and is the first to systematically compare all nesting structures. Using industry-level data from 12 OECD countries, we find that the nesting structure where capital and labour are combined first, fits the data best, but for most countries and industries we cannot reject that all three inputs can be put into one single nest. These two nesting structures are used by most climate models. However, while several climate policy models use a... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Climate Policy; Input Substitution; Technological Change; Environmental Economics and Policy; O13; Q32; Q43; Q55. |
| Ano: 2007 |
URL: http://purl.umn.edu/9549 |
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| Di Maria, Corrado; van der Werf, Edwin. |
| A common critique to the Kyoto Protocol is that the reduction in emissions of CO2 by countries who comply with it will be (partly) offset by the increase in emissions on the part of other countries (carbon leakage). This paper analyzes the effect of technical change on carbon leakage in a two-country model where only one of the countries enforces an exogenous cap on emissions. Climate policy induces changes in relative prices, which cause carbon leakage through a terms-of-trade effect. However, these changes in relative prices in addition affect the incentives to innovate in different sectors. We allow entrepreneurs to choose the sector for which they innovate (directed technical change). This leads to a counterbalancing induced-technology effect, which... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Environmental Economics and Policy. |
| Ano: 2006 |
URL: http://purl.umn.edu/12056 |
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