October 17, 2010

Economics of Endogenous Technical Change in CGE Models - The Role of Gains from Specialization

by Florentine Schwark

- Computable general equilibrium models simulate the reaction of industries on carbon taxes. Their results differ strongly on the assumption of the underlying technologies. This paper compares two models and emphasizes the differences between their approaches to technology. The first model is the CITE model, which is the fi rstmodel with endogenous growth based on gains from specialization so that growth dynamics result from investment incentives. The second model is a model with exogenous growth of endowments, which is the basis for many other CGE models.

Schwarkz, F. (2010). "Endogenous Growth, Asymmetric Trade and Resource Taxation." CER-ETH, Center of Economic Research, ETH Z├╝rich, Economics Working Paper Series, Working Paper No. 10/130, Jun 2010.