Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125739
Authors: 
Rengs, Bernhard
Scholz-Wäckerle, Manuel
Gazheli, Ardjan
Antal, Miklós
van den Bergh, Jeroen
Year of Publication: 
2015
Series/Report no.: 
WWWforEurope Working Paper 83
Abstract: 
Climate policy has been mainly studied with economic models that assume representative, rational agents. However, it aims at changing behavior associated with carbon-intensive goods that are often subject to bounded rationality and social preferences, such as status and imitation. Here we use a macroeconomic multi-agent model with such features to test the effect of various policies on both environmental and economic performance. The model is particularly suitable to address distributional impacts of climate policies, not only because populations of many agents are included, but also as these are composed of different classes of households driven by specific motivations. We simulate various policy scenarios, combining in different ways a carbon tax, a reduction of labor taxes, subsidies for green innovation, a price subsidy to consumers for less carbon-intensive products, and green government procurement. The results show pronounced differences with those obtained by rational-agent model studies. It turns out that demand-oriented subsidies lead to lower unemployment and higher output, but perform less well in terms of carbon emissions. The supply-oriented subsidy for green innovation results in a significant reduction of carbon emissions with a slight reduction of unemployment.
Subjects: 
Agent based modelling
climate change
bounded rationality
carbon productivity
environmental innovation
double dividend
other-regarding preferences
JEL: 
B52
C63
H3
Q55
Document Type: 
Working Paper
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