Testing innovation, employment and distributional impacts of climate policy packages in a macro-evolutionary systems setting

Rengs, Bernhard and Scholz-Wäckerle, Manuel and Gazheli, Ardjan and Antal, Miklós and van den Bergh, Jeroen (2015) Testing innovation, employment and distributional impacts of climate policy packages in a macro-evolutionary systems setting. WWWforEurope, 83. European Commission, bmwfw, Vienna.

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Abstract

Climate policy has been mainly studied with economic models that assume representative, rational agents. However, it aims at changing behavior associated with carbon-intensive goods that are often subject to bounded rationality and social preferences, such as status and imitation. Here we use a macroeconomic multi-agent model with such features to test the effect of various policies on both environmental and economic performance. The model is particularly suitable to address distributional impacts of climate policies, not only because populations of many agents are included, but also as these are composed of different classes of households driven by specific motivations. We simulate various policy scenarios, combining in different ways a carbon tax, a reduction of labor taxes, subsidies for green innovation, a price subsidy to consumers for less carbon-intensive products, and green government procurement. The results show pronounced differences with those obtained by rational-agent model studies. It turns out that demand-oriented subsidies lead to lower unemployment and higher output, but perform less well in terms of carbon emissions. The supply-oriented subsidy for green innovation results in a significant reduction of carbon emissions with a slight reduction of unemployment.

Item Type:	Paper
Keywords:	Agent based modelling / climate change / bounded rationality / carbon productivity / environmental innovation / double dividend / other-regarding preferences
Classification Codes:	JEL B52, C63, H3, Q55
Divisions:	Departments > Sozioökonomie
Depositing User:	Elena Simukovic
Date Deposited:	24 Nov 2015 12:02
Last Modified:	22 Oct 2019 00:41
FIDES Link:	https://bach.wu.ac.at/d/research/results/72638/
URI:	https://epub.wu.ac.at/id/eprint/4721

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