June 1, 2008

A Forward Looking Version of the MIT Emissions Prediction and Policy Analysis (EPPA) Model.

by Mustafa Babiker, Angelo Gurgel, Sergey Paltsev and John Reilly

- This paper documents a forward looking multi-regional general equilibrium model developed from the latest version of the recursive-dynamic MIT EPPA model. The model represents full inter-temporal optimization (perfect foresight), which makes it possible to better address economic and policy issues such as borrowing and banking of GHG allowances, efficiency implications of environmental tax recycling, endogenous depletion of fossil resources, international capital flows, and optimal emissions abatement paths among others. In this paper the authors present some applications of the model that include the reference case and its comparison with the recursive EPPA version, as well as some greenhouse gas mitigation cases where we explore economic impacts with and without inter-temporal trade of permits.

Babiker, M., A. Gurgel, S. Paltsev and J. Reilly (2008). "A Forward Looking Version of the MIT Emissions Prediction and Policy Analysis (EPPA) Model." MIT Global Change Joint Program, Report 161, May 2008.