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PACE(Policy Analysis based on Computable Equilibrium) is a flexible system of computable general equilibrium (CGE) models which integrates the areas of economy, energy, and environment. The generic core of PACE is a standard multi-sector, multi-region CGE framework of global trade and energy use designated to assess major policy initiatives in a world that is increasingly integrated through trade. Departing from the generic core, the various PACE modules allow for the problem-specific analysis of policy interference at different regional and sectoral levels as well as time treatments (static, dynamic-recursive, intertemporal). The different PACE modules account for issue-driven priorities in the representation of details and functional relationships. There is a module that emphasizes discrete technological choice in the energy system thereby featuring a bottom-up representation of alternative electricity supply options. Another modules incorporate a detailed description of labor market imperfections and public taxation to trace back the interaction of tax policies and involuntary unemployment (e.g. due to union-bargaining). Further modules include a disaggregate representation of different household types or overlapping generations in order to allow for more detailed incidence analysis or a vintage approach to car stocks in order to investigate the implications of alternative emission regulation policies for automobile industries. More recently, an integrated assessment module has been added that links a reduced from representation of climate relationships with a comprehensive intertemporal multi-sector, multi-region model for the world economy.
Typical Model Applications:
The PACE modeling system has been primarily used for the economic analysis of energy and environmental policy initiatives. Examples include the assessment of carbon abatement policies (Kyoto and Post-2012), multi-gas analysis of long-term climate policy scenarios, sectoral impacts of the EU emissions trading scheme, environmental tax reforms, nuclear phase-out, green quotas, or fossil fuel subsidies. However, several sub-modules allow for the problem-specific investigation of trade, tax, and labor market policies without a focus on energy or environmental markets. Recent applications on these fields include the assessment of value-added tax and income tax reforms, labor market regulation, or trade integration.
An illustrative application of the PACE model together with a sectoral model (SIMAC) was carried out within the I.Q.Tools project in the test case Joint Implementation and Clean Development Mechanism:
- An extension of the PACE model for impacts on competitiveness was carried out within the I.Q.Tools project:
- An extension of the PACE model for impacts on households was carried out within the I.Q.Tools project:
- An extension of the PACE model for impacts on "Carbbon Capture and Storage / Carbon Sinks" was carried out within the I.Q.Tools project:
- An extension of the PACE model for considering imperfect competition was carried out within the I.Q.Tools project:
For sample applications see:
Böhringer, C. (1996), Fossil Fuels Subsidies and Environmental Constraints, Environmental and Resource Economics 8-3, 331-349.
Böhringer, C. and T.F. Rutherford (1997) Carbon Taxes with Exemptions in an Open Economy - A General Equilibrium Analysis of the German Tax Initiative, Journal of Environmental Economics and Management 32, 189-203.
Böhringer, C. (2002), Industry-level Emission Trading between Power Producers in the EU, Applied Economics 34 (4), 523-533.
Böhringer, C. and T.F. Rutherford (2002) Carbon Abatement and International Spillovers, Environmental and Resource Economics 22(3), 391-417.
Böhringer, C. (2002), Climate Politics From Kyoto to Bonn: From Little to Nothing?, The Energy Journal 23 (2), 51-71.
Böhringer, C. und C. Vogt (2003), Economic and Environmental Impacts of the Kyoto Protocol, Canadian Journal of Economics 36(2), 475-494.
Böhringer, C., K. Conrad and A. Löschel (2003), Carbon Taxes and Joint Implementation - An Applied CGE Analysis for Germany and India, Environmental and Resource Economics, 24 (1), 49-76.
Böhringer, C. and H. Welsch(2004), C&C - Contraction and Convergence of Carbon Emissions: The Implications of Permit Trading, Journal of Policy Modelling, 26, 21-39.
Böhringer, C., A. Löschel, and J. Francois (2004), A Computable General Equilibrium Model for Climate and Trade Policy Anaysis, in: Böhringer, C. and A. Löschel (eds.), Climate Change Policy and Global Trade, ZEW Economic Studies 26, Physica (Springer), 111-144.
Böhringer, C. and A. Lange (2005), Mission Impossible!? On the Harmonization of National Allocation Plans under the EU Emission Trading Directive, Journal of Regulatory Economics 27 (1), 81-94.
Böhringer, C. and A. Lange (2005), Economic Implications of Alternative Allocation Schemes for Emission Allowances, in: Scandinavian Journal of Economics 107 (3), 563-581.
Böhringer, C., S. Boeters und M. Feil (2005), Taxation and Unemployment: An Applied General Equilibirum Approach for Germany, Economic Modelling 22 (1), 81-108.
Böhringer, C., A. Löschel, and T.F.Rutherford (2005), Efficiency Gains from "What"-Flexibility, The Energy Journal (forthcoming).
- JRC European Commission, IA Tools, supporting impact assessement in the European Commission