GEM-E3
GEM-E3 has been used by the EU Commission to assess climate change and energy policy options. It is a computable general equilibrium model covering the whole world aggregated to 38 regions and 25 economic activities, The GEM-E3 model was initially built under the auspices of EC (DG-RTD) by a consortium involving ICCS, NTUA, BUES, ERASME, KUL, PSI and ZEW. The model, in line with standard modeling practice, has been designed as a single equilibrium model and calibrated to a single year. Therefore, it is fit primarily to study future variations in the environment of the equilibrium growth path given by the business as usual scenario. We have used it in order to study the welfare and economy-wide implications of a 30% emissions reduction target. However, our primary goal here is to study the implications of such a target when the possibility of a new growth path is taken into account (> see Essentials). Currently, no multi-regional and multi-sector model with multiple equilibria is available for the European economy, and it will take considerable work to develop one. However, it is possible to achieve a first approximation to a new growth path by introducing three key features in a model like GEM-E3: learning by doing, shifting expectations, and different regimes of the labor market. This we have done, and with the enhanced model we have investigated the possibility of a new growth path for Europe. The document available below explains the functioning of the GEM-E3 model, with and without these modifications. From a computational point of view, the modifications are minor, but they are significant in an economic perspective.
