The paper develops a new type of CGE model to predict the effects of carbon policies on consumption, welfare, and sectoral development in the long run. Growth is fully endogenous, based on increasing specialization in capital varieties, and specic in each sector of the economy. The benchmark...

Computable general equilibrium models simulate the reaction of industries on carbon taxes. Their results differ strongly on the assumption of the underlying technologies. This paper compares two models and emphasizes the differences between their approaches to technology. The first model is the...

In most policy applications of general equilibrium modeling, cost functions are calibrated to benchmark data. Modelers often choose the functional form for cost functions based on suitability for numerical solution of the model. The data (including elasticities of substitution) determine first...