- Geographical scope:National, Regional
- Model type:Integrated assessment model
GEMINI-E3 is a multi-country, multi-sector, recursive computable general equilibrium (CGE) model. It simulates all relevant markets, domestic and international, considered as perfectly competitive, which implies that the corresponding prices are flexible in markets for commodities (through relative prices), for labour (through wages), and for domestic and international savings (through rates of interest and exchange rates). Time periods are linked in the model through endogenous real rates of interest determined through the balancing of savings and investment. National and regional models are linked by endogenous real exchange rates resulting from constraints on foreign trade deficits or surpluses. There is one notable—and usual—exception to this general assumption of perfect competition, which concerns foreign trade. Goods of the same sector produced by the different countries are not supposed to be perfectly competitive; they are considered as economically different goods, more or less substitute according to an elasticity of substitution known as the Armington assumption. The main outputs of the GEMINI-E3 model are on a country and annual basis: carbon taxes, marginal abatement costs and prices of tradable permits (when relevant), effective abatement of CO2 emissions, net sales of tradable permits (when relevant), total net welfare loss and components (net loss from terms of trade, pure deadweight loss of taxation, and net purchases of tradable permits when relevant), macro-economic aggregates (e.g. production, imports and final demand), real exchange rates and real interest rates, and data at the industrial level (e.g. change in production and in factors of production, and prices of goods).
A EU version of the model is being implemented within the DIAMOND project.
The EU region in the global version will be further broken down into multiple regions to considerably enhance the model’s level of detail of climate policy insights at the national and EU level and improve empirical consistency and predictive precision with other IAMs. DIAMOND will also enable the integration of the health impact of air pollutants, contributing to a more comprehensive assessment of ancillary benefits of mitigation in standard CGE.
Learn everything about the GEMINI-E3 EU model here.