This proposed research will look at the current theoretical and empirical works in the area of induced technical change (ITC) and examine the impact of ITC on economic growth, international trade, resource depletion, and climate change. The type of ITC considered will relate to the issues of fuel efficiency, fuel substitution, and emission abatement activities in the context of climate change.
The different forms of ITCs will interact or compete for the same investment resources in the economy, and therefore, their total net impact on the economy and the environment may be ambiguous. This needs to be studied. In addition to the induced technical change, which affects the technological parameters of the emissions equation, such as the fuel intensity or emissions intensity per unit of fuel input or activity output, the proposed research will also look at the effects of behavioural or lifestyle changes on the composition and scale of socio-economic activities and therefore of total emissions. This is in addition to the changes caused by the ITC, i.e. the technique effects.
The proposed research will look at all these effects and their interactions within the framework of a general equilibrium model of the economy, and link the model to a climate change model. The general equilibrium economic model will be able to handle the issues of the relationship between economic growth, trade, and environmental impacts such as emissions and climate change. The role of induced technical and behavioural change in such a model will be highlighted to give concrete assistance to the design of optimal climate change policy especially within the context of European economies and the Kyoto Protocol.
Fields of science
Call for proposal
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