How does climate policy affect the pace and direction of technical change? Theory and applications in a general equilibrium framework – CLIPOL&TECH
CLIPOL&TECH will investigate the effects of technology- , investment- and trade- related policies on innovation and international diffusion of clean and dirty technologies and on the global climate. While theoretical analysis and numerical simulations of stylised models will provide qualitative insights, these will be complemented by empirical assessments using a modified version of the ICES model developed by FEEM.
The project builds on recently developed theoretical models in which the direction of technical change is endogenously determined by profit-driven innovation in imperfectly competitive markets. The first contribution of the research is to extend this theoretical framework so that the project may study the pace, as well as the direction of technical change. Moreover, CLIPOL&TECH will allow for both trade and knowledge flows between regions.
CLIPOL&TECH will investigate the effects of technology-, investment- and trade- related policies on innovation and international diffusion of clean and dirty technologies and on the global climate. Theoretical analysis and numerical simulations of stylised models will provide qualitative insights. These will be complemented by empirical assessments using a modified version of the Intertemporal Computable Equilibrium System (ICES) model that has been developed by the host institution. Taking advantage of the multiregional and multisectoral structure of ICES, our study will be distinguished by consideration of both disembodied and embodied channels of technical diffusion.