- Joint Program Report
The MIT Economic Projection and Policy Analysis (EPPA) model has been broadly applied on energy and climate policy analyses. In this paper, we provide an updated version of the model based on the most recent global economic database with the base year data of 2007. Also new in this version of the model are non-homothetic preferences, a revised capital vintaging structure, separate accounting of residences, and an improved model structure that smooths its functioning and makes future extensions easier. The study finds that, as the economies grow, the empirically observed income elasticities of demand are better represented by our setting than by a pure Stone-Geary approach, and simulation results are more sensitive to GDP growth than energy and non-energy substitution elasticities and autonomous energy efficiency improvement.
Revised October 2015.