Enhancing understanding of climate policy impacts and decision-making through inter-modal comparisons.
The IRENCGE-DF and GEEM models were employed to assess the economic impact of a gradual carbon tax increase to reduce emissions by 35% over 6 years by 2030. Despite differences in model design, both models provided similar qualitative and quantitative results, such as predicting decreases in GDP, consumption, and labor (though with slight quantitative disparities). However, each model offers unique insights: IRENCGE-DF predicts increased distributional inequalities, a shift from high- to low-emission industries, and a greater share of renewables in the energy mix, while GEEM emphasizes more severe short-term economic effects due to forward-looking behavior and New Keynesian elements (e.g., imperfect competition and price-setting frictions). This emphasizes how the two models can complement each other, providing a more comprehensive analysis of policy development.