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http://dx.doi.org/10.15266/KEREA.2021.30.2.169

New Computable General Equilibrium Analysis of the Effects of Greenhouse Gas Emissions Reduction Policies  

Han, Minsoo (International Macroeconomics & Finance Department)
Moon, Jin-Young (Center for International Development Cooperation)
Publication Information
Environmental and Resource Economics Review / v.30, no.2, 2021 , pp. 169-205 More about this Journal
Abstract
This study quantitatively analyzes the impact of greenhouse gas (GHG) emissions reduction policies on the global economy. To this end, we develop a multi-national and multi-industry static computational general equilibrium model that includes three components-GHG emissions from production, disutility due to GHG emissions, and governments' GHG emissions reduction policies. Then we calibrate the model with the relevant data and solve for the equlibrium using the most recent methodology (exact hat algebra). We find that the strengthening of unilateral GHG emissions reduction policies for each country reduces carbon emissions from domestic producers, but does not necessarily reduce global carbon emissions as production is relocated to other countries. On the other hand, we can reduce GHG emissions when all major countries simultaneously implement the strengthened reduction policies proposed by the OECD (2016). Our results imply that aligned reduction efforts of major countries are necessary to reduce global GHG emissions.
Keywords
Climate Change; Greenhouse Gas (GHG) Emissions Reduction Policies; Computable General Equilibrium Model(CGE); Exact Hat Algebra;
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