Benchmarking the Future: A Dynamic, Multi-Regional, Multi-Sectoral Trade Model for the Analysis of Climate Policies

For analyzing the impact of climate change and of international climate policies on the international division of labor and on regional welfare the use of a disaggregated multi-sectoral, multi-regional dynamic computable general equilibrium model is appropriate. This paper discusses the problems of defining an appropriate benchmark against which policy simulations and climate change impacts can be assessed. It explicitly considers regionally differentiated growth rates by basing the development of the parameters which determine human and physical capital growth, technical progress and technology diffusion as well as savings decisions on historical developments and estimates in the literature. A sensitivity analysis of important parameters is performed.