A Model of Endogenous Growth for Climate and Development Policy Assessment

We introduce endogenous directed technical change into integrated climate policy assessment. Our model builds on state-of-the-art theory as well as econometric data. We apply our model to the assessment of a carbon budget based climate policy. Motivated by the announcement of international transfers during recent climate policy negotiations, we vary the begin of endogenous international transfers of energy saving technologies. Our results indicate that most of the consumption gains from early transfers are already captured in the baseline scenario without climate policy. Herein, China appears as a main beneficiary of early transfers. Keeping the emission budget at low consumption losses, however, requires the availability of low-carbon technologies beyond energy savings. JEL Classifications: O11, O30, O44, O47, Q32