The Evolution of the MATRIX Model
12:00 - 13:00
Fondazione Eni Enrico Mattei, Sala Cinema | Corso Magenta 63, Milan
Emanuele Ciola (Fondazione Eni Enrico Mattei and Università degli Studi di Brescia); Enrico Turco (Fondazione Eni Enrico Mattei and Università Cattolica di Milano)
Wednesday, October 25th 2023
12:00 a.m – 01.00 p.m
Fondazione Eni Enrico Mattei
Corso Magenta 63, Milan
“Warming the Matrix” has explored the potential impacts of climate change and mitigation policies on the Euro Area, considering the uncertainty and heterogeneity in both climate and economic systems. Using the MATRIX model, we simulated various climate scenarios by employing different carbon cycle models, damage functions, and marginal abatement curves found in the literature. We found that heterogeneous climate damages amplify both the magnitude and the volatility of GDP losses associated with global warming. Moreover, we found that the speed and feasibility of a low-carbon transition crucially depend on (i) the stringency of emission reduction targets, which determine the level of a carbon tax, and (ii) the rate of technological progress, which influences the shape of the abatement cost curve. We are currently working on two extensions derived from the MATRIX model. The first one specifically focuses on the demand side of the economy by introducing a pro-environmental attitude into the preference structure of consumers and firms in the simulated economy. That is to analyse if the demand for less polluting goods can modify firms’ profit motives and stimulate investments in low-carbon technology, also measuring the related effects on income and wealth redistribution among sectors and agents. The second introduces endogenous and direct technical change in AB-IAM in two forms: in the consumption and capital goods sectors, where R&D improves factor productivity (labour and fossil fuel), and in the energy sector, where energy firms can invest in R&D to improve the productivity of green or brown technologies depending on their relative profitability.
Emanuele Ciola obtained the joint PhD in Economics at the Università Politecnica delle Marche (Ancona, Italy) and the Universitat Jaume I (Castellón de la Plana, Spain) in 2019. The thesis focused on the feedback between the real economy and the financial market and its effects on macroeconomic dynamics in the short and long term. He worked as a research fellow at the Università Politecnica delle Marche and was a visiting researcher at the European Stability Mechanism. He is currently a researcher at the Fondazione Eni Enrico Mattei in the research program “Modelling the Energy Transition” (MET-ABM).
Enrico Turco received his PhD in Economics under a European Joint Doctorate programme between the University of Amsterdam and the Catholic University of Sacred Heart in Milan (project ExSIDE, Marie Skłodowska-Curie Actions –Innovative Training Networks), with a thesis about the investigation of the causes behind the tendency towards stagnation and financialization of the economy, with a special focus on the impact of the process of rising market concentration on income distribution and economic growth. Currently he is Junior Researcher at the Fondazione Eni Enrico Mattei as a part of the research project “Modelling Energy Transition (MET-ABM)”.