Economic Growth and Choice of Energy: A Simplistic Strategic Approach

Engwerda, Jacob; Michalak, Tomasz P.

doi:10.1007/s10666-014-9431-5

Cited by 4 publications

(10 citation statements)

References 42 publications

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“…The model is based on the standard Solow exogenous growth model introduced by [21]. The model can be obtained along the lines of [5]. Therefore, details are omitted.…”

Section: The Modelmentioning

confidence: 99%

“…Clearly, the use of open-loop strategies is made to simplify the analysis. A discussion of pros and cons using this setting can be found in, e.g., [5]. In particular we recall some observations from literature suggesting that the difference between open-loop and feedback policies in practice might not be that large (see, e.g., [15], [1]).…”

Section: Benchmark Model Simulationsmentioning

confidence: 99%

“…Our main object of study are the corresponding steady state equilibrium values of the involved economic target variables and instruments. The benchmark model we use is obtained along the lines of a similar model used by [5] to analyze the impact of pollution over time on the fossil fuel/green energy ratio in a dynamic world characterized by four players that have different interests.…”

Section: Introductionmentioning

confidence: 99%

“…In Section 2, we create our simple dynamic linear two country growth model along the lines of [5] based on the standard Solow growth model introduced by [21]. We integrate the impact of CO 2 emission on economic growth in this model to get a world energy model.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Measuring impact of uncertainty in a stylized macro-economic climate model within a dynamic game perspective

Stienen

Engwerda

2018

IFAC-PapersOnLine

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In this paper we try to quantify/measure the main factors that influence the equilibrium outcome and pursued strategies in a simplistic model for the use of fossil versus green energy over time. The model is derived using the standard Solow macro-economic growth model in a twocountry setting within a dynamic game perspective. After calibrating the model for a setting of OECD versus non-OECD countries we study what kind of uncertainties affect the outcomes of the linearized model most, assuming both countries use Nash strategies to cope with shocks that impact the model. The main outcome of this study is that the parameters that occur in the objective of both players seem to carry the most uncertainty for both the outcome of the model and strategies.

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“…The model is based on the standard Solow exogenous growth model introduced by [21]. The model can be obtained along the lines of [5]. Therefore, details are omitted.…”

Section: The Modelmentioning

confidence: 99%

Section: Benchmark Model Simulationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Measuring impact of uncertainty in a stylized macro-economic climate model within a dynamic game perspective

Stienen

Engwerda

2018

IFAC-PapersOnLine

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“…Our benchmark model is closely related to a similar model as used in [17] to analyze the impact of pollution over time on the fossil fuel/green energy ratio in a dynamic world characterized by four players that have different interests. Results obtained with that model seem to be quite plausible, and, therefore, the question in that paper was already posed how robust the presented results are with respect to different sorts of model uncertainties.…”

Section: Introductionmentioning

confidence: 99%

Measuring Impact of Uncertainty in a Stylized Macroeconomic Climate Model within a Dynamic Game Perspective

Stienen

Engwerda

2020

Energies

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In this paper, we present a stylized dynamic interdependent multi-country energy transition model. The goal of this paper is to provide a starting point for examining the impact of uncertainty in such models. To do this, we define a simple model based on the standard Solow macroeconomic growth model. We consider this model in a two-country setting using a non-cooperative dynamic game perspective. Total carbon dioxide (CO2) emission is added in this growth model as a factor that has a negative impact on economic growth, whereas production can be realized using either green or fossil energy. Additionally, a factor is incorporated that captures the difficulties of using green energy, such as accessibility per country. We calibrate this model for a two-player setting, in which one player represents all countries affiliated with the Organization for Economic Cooperation and Development (OECD) and the other player represents countries not affiliated with the OECD. It is shown that, in general, the model is capable to describe energy transitions towards quite different equilibrium constellations. It turns out that this is mainly caused by the choice of policy parameters chosen in the objective function. We also analyze the optimal response strategies of both countries if the model in equilibrium would be hit by a CO2 shock. Also, here we observe a quite natural response. As the model is quite stylized, a serious study is performed to the impact several model uncertainties have on the results. It turns out that, within the OECD/non-OECD framework, most of the considered uncertainties do not impact results much. However, the way we calibrate policy parameters does carry much uncertainty and, as such, influences equilibrium outcomes a lot.

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