Finance Canada uses a suite of four models for macroeconomic analysis, and it has developed an additional in-house climate variant of its CGE model.
Its experience has been that building and maintaining a multi-country, multi-region CGE model that tracks emissions is possible within the capacity of a small team of experienced economic modelers.
- While Environment and Climate Change Canada (ECCC) maintains its own suite of models, building a climate variant of the Department of Finance’s CGE model was deemed necessary because of the magnitude of potential economic and fiscal impacts, the likelihood that a climate-specific model would be used repeatedly, and the absence of key variables (in particular, emissions) in existing models.
- Having a model that was developed and is maintained internally is a benefit, as the expertise exists to quickly adapt the model to analyze a diverse set of topics.
- Ensuring that the expertise is maintained requires resources for senior modelers to train new modelers.
For many projects, discussions between modelers and subject matter experts lead to decisions about how best to approximate the scenario within the existing structure of the models rather than building a new purpose-built model.
Keywords
capacity buildingcarbon pricingmacroeconomic indicatorsmodelspolicy mix
