Global warming associated with the greenhouse effect has emerged as a leading environmental concern. Many nations, including the United States, are considering policy measures designed to reduce the rate of green house gas emissions. Moreover, multilateral action is being discussed under the auspices of the Intergovernmental Panel on Climate Change. The objective of this project is to develop a modeling framework for assessing the impact on the U.S. economy of policies aimed at mitigating global climate change. Specifically, the project consists of three separate, but related parts. The first involves developing new econometric methods for estimating industry-wide models of productivity growth. Attention is focused on autonomous increases in efficiency for both energy and non-energy inputs. The underlying model to be developed will allow productivity trends to be both deterministic as well as stochastic. Second, new methods will be developed for assessing the distributional impacts of policies aimed at mitigating the effects of global climate change. These distributional impacts are likely to be very significant, especially for policies that rely on taxation of energy use. The third part of the study will involve the development of new algorithms in order to achieve the maximum possible computational efficiency in assessing the impact of policies aimed at mitigating climate change.
