Name: IMF-ENV
Type: CGE
Institution: IMF
Documentation: Chateau et al. (2025)
Geographic coverage: Global
Description: The model is a global dynamic CGE model based on input-output tables for 160 countries and 76 commodities. It models the real economy with sectoral and country granularity and comprehensive representation of trade flows.
Questions to be answered/variables considered: The model is well-suited to studying the medium- and longterm effects of policies that cause structural change. It shows how policies impact the allocation of factors of production across sectors, trade flows, and international competitiveness, as well as standard real economic variables and emissions. Policies that can be simulated include different carbon pricing schemes, energy policies including subsidies and (in)direct regulation, sectoral regulation, and new green technologies. The model can account for climate change damages (long-term shifts and variation in extreme weather events) at both sectoral and aggregate levels. It can also be linked to sector-specific models (e.g., for energy, agriculture, or land-use), and can use household survey data or links to microsimulation models to analyze poverty and inequality effects.
Strengths: The model is well-suited for analyzing sectoral effects from structural shifts and the impact of energy and climate policies. It considers interlinkages among various sectors, agents, markets, and international transactions, thereby showing the broader domestic and global economic impacts of policies and uncovering indirect (general equilibrium) effects.
Limitations: CGE models such as IMF-ENV are limited in analyzing short-term macroeconomic fluctuations and, as they are real economy models, are unable to examine monetary policy effects.
Use:
- Global CGE models such as IMF-ENV typically use subscription-based datasets like the Global Trade Analysis Project (GTAP) Data Base, along with a wide range of parameters from the literature.
- The model has been used in a variety of contexts, including multi-country studies on international climate policy cooperation and supporting climate policy analysis within individual countries.
- Economic strategy and policy: IMF-ENV can be used to simulate alternative fiscal policy packages to reach NDCs and assess their fiscal and economic implications.
- Fiscal policy and budget: sectoral granularity and the incorporation of general equilibrium effects allow better estimates of revenue and spending implications of different climate policies.
- Financial policy and oversight: the NGFS scenarios have been modeled within IMF-ENV to produce outcomes such as sectoral value-added, capital and labor demand, and overall GDP impacts for all G20 economies. These results have been integrated into the Financial Sector Assessment Programs (FSAPs) to examine transition risks and enhance the understanding of their potential effects on financial stability.
Development/lessons/challenges:
- IMF-ENV is in continuous development. Current development efforts are aimed at creating an R&D and technology diffusion module and updating the characterization of international capital flows in the model.
- Developing CGE models from scratch is a resource-intensive task and requires specialized expertise. A pragmatic strategy for Ministries of Finance may include enhancing their current analytical tools to establish a link between economic and environmental outcomes.