CEPII, Recherche et Expertise sur l'economie mondiale
MIRAGE-e: A General Equilibrium Long-term Path of the World Economy

Lionel Fontagné
Jean Fouré
Maria Priscila Ramos

 Highlights :
  • We integrate long-term issues (energy efficiency and prices, agricultural productivity) in a new version of the Computable General Equilibrium (CGE) model MIRAGE, nicknamed MIRAGE-e.
  • This version of MIRAGE implements a consistent baseline framework for CGE analysis up to the 2100 horizon by interacting with the long-term growth model MaGE.
  • MIRAGE-e integrates up-to-date modelling of energy demand by firms, while introducing a parallel accounting for energy flows in physical quantities.
  • We acknowledge and quantify the vast uncertainty underlaid by baseline assumptions by comparing scenarios on population (fertility, education and female participation).
  • At our horizon, economies will shift towards services as they increasingly rely on skilled labour. CO2 emissions trajectories, in absence of any emission mitigation policy, prove to be unsustainable.

 Abstract :
Thinking of how the relative sizes of countries and how the geography of world production and trade will be affected in the long run must be based on sound economic reasoning about the determinants of long term growth. It must also be embedded in a general equilibrium framework that takes account of the interactions among markets and sectors, as well as between countries. This paper takes stock of a three phase research project. The first step consists of deriving and estimating a three-factor (labour, capital, energy) macroeconomic growth model for a large set of individual countries, which fits two forms of technological progress (standard TFP and energy efficiency). The second step consists of recovering the sectoral detail with an energy-oriented Computable General Equilibrium model of the world economy calibrated to fit these projections. In a third step we confront the assumptions for our baseline to alternative scenarios.

 Keywords : CGE model | Dynamic Baseline | Growth model | Energy

 JEL : c53, c68, o44, o47, q56
CEPII Working Paper
N°2013-39, December 2013

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