Induced technical change and the cost of climate policy
Name
MITJPSPGC_Rpt102.pdf
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722.71 KB
Format
Adobe PDF
Checksum (MD5)
62d3f483c60eed3a9a009509bcac1bfb
Author(s)
Sue Wing, Ian.
Date Issued
September 2003
Series/Report no.
;Report no. 102
Abstract
This paper investigates the potential for a carbon tax to induce R&D, and for the consequent induced technical change (ITC) to lower the macroeconomic cost of abating carbon emissions. ITC is modelled within a general equilibrium simulation of the U.S. economy by the effects of emissions restrictions on the level and composition of aggregate R&D, the accumulation of the stock of knowledge, and the industry-level reallocation and substitution of intangible services derived therefrom. Contrary to other authors, I find that ITC's impact is large, positive and dominated by the latter "substitution effect," which mitigates most of the deadweight loss of the tax.
Description
Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).
Subjects
induced technical change
climate-change policy
computable general equilibrium models
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