Title: Climate change and endogenous growth theory: forecasting by the ADICE model

Authors: Sardar M.N. Islam, Peter Sheehan, Jim Gigas, Hieu Trinh, Fred Puno

Addresses: Centre for Strategic Economic Studies, Victoria University of Technology, Melbourne, Victoria 8001, Australia. ' Centre for Strategic Economic Studies, Victoria University of Technology, Melbourne, Victoria 8001, Australia. ' Centre for Strategic Economic Studies, Victoria University of Technology, Melbourne, Victoria 8001, Australia. ' Department of Engineering, University of Melbourne, Melbourne, Victoria, Australia. ' Centre for Strategic Economic Studies, Victoria University of Technology, Melbourne, Victoria 8001, Australia

Abstract: This paper presents a preliminary study of the effects of modelling endogenous technological progress in a climate-economic growth model. The endogenous path of the technological progress function is estimated with reference to the DICE model of Nordhaus (1994). The parameters are chosen so the resulting model minimises the difference between the paths of exogenous and endogenous forecasts. The endogenous technological change function is then used to forecast the future paths of climate and economic variables. The results of the forecast are compared with the exogenous forecasting ADICE results. The results show that, without policy intervention, endogenous technological progress will generate higher levels of economic activity without any reduction in the level of emissions or environmental benefits.

Keywords: ADICE model; climate change; forecasting; endogenous growth; technological progress; economic growth; modelling; environmental pollution.

DOI: 10.1504/IJEP.1997.028162

International Journal of Environment and Pollution, 1997 Vol.8 No.1/2, pp.122 - 133

Published online: 15 Sep 2009 *

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