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reports - Deliverable

Tools and models for assessing the macroeconomic impacts of energy and environmental policies

reports - Deliverable

Tools and models for assessing the macroeconomic impacts of energy and environmental policies

This document illustrates and describes the characteristics, fields of application and methodologies for the use of tools and models to analyze the impacts (in the short, medium and long term) on the economic system of external factors and shocks that coincide, in the context of RSE activities, with decarbonization scenarios resulting from energy and environmental policies defined by authorities at the national and European levels.

Macroeconomics is the branch of economic science that describes the performance of the economic system as a whole, with particular reference to aggregate magnitudes (e.g., Gross Domestic Product, sectoral composition of production, inflation and employment dynamics) and the relationships between them.

 

Therefore, macroeconomic analysis is an indispensable support tool as part of the process of evaluating policy interventions, as it allows us to understand their implications and impacts on the production system and on the welfare of the social and institutional groups that compose it.
As part of the ‘System Research’ (RdS) activity to support the governance of the energy system by RSE, it is of primary importance that we have one or more tools to supplement the development of scenarios referring to the national energy system (and to support the government in the impact analyses of environmental decarbonization policies) with appropriate macroeconomic impact analyses.
This paper is therefore a first step in preparation for the launch of a new line of research—albeit part of the energy scenario development processes—and aims to provide an overview of potential tools that could be adopted for the analysis of macroeconomic impacts.

 

To date, models and tools are available that differ in structure, methodology, theoretical approach, and type of results; therefore, it is essential to understand their characteristics.

 

The paper describes four types of tools that have been evaluated to date: input-output tables, Social Accounting Matrices (SAMs), Computable General Equilibrium (CGE) models, and System Dynamics (SD) models.
For each of these, in addition to a description of their peculiarities, advantages and limitations, the report mentions the users belonging to the RSE stakeholder group and their adopted methodologies, potential suppliers and/or developers, based on the evidence provided by the literature.
It is concluded that the tools and models under study, as a result of that highlighted in the paper, can be adopted for the type of investigation to be carried out.

 

Input-output tables and SAMs can be used for comparative or precision statistical analyses with short- or medium-term time horizons.
CGE models, particularly if they are dynamic, on the other hand, are widely used in impact analyses since they adequately capture the long-term impacts of environmental energy policies and related scenarios.

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