The Value-Added of Sectoral Disaggregation: Implications on Competitive Consequences of Climate Change Policies

45 Pages Posted: 23 Nov 2012

See all articles by Viktoria Alexeeva-Talebi

Viktoria Alexeeva-Talebi

ZEW – Leibniz Centre for European Economic Research

Christoph Böhringer

University of Oldenburg - Economic Policy; Centre for European Economic Research (ZEW)

Andreas Löschel

University of Muenster - Chair of Microeconomics, esp. Energy and Resource Economics

Sebastian Voigt

ZEW – Leibniz Centre for European Economic Research

Date Written: 2012

Abstract

Global impact assessment of unilateral climate policies is commonly based on multi‐sector, multi‐region computable general equilibrium (CGE) models that are calibrated to consistent accounts of production, consumption, and bilateral trade flows. However, global economic databases such as GTAP treat energy-intensive and trade-exposed industries rather in aggregate, thereby missing potentially important details on the heterogeneity of these sectors. In this paper, we elaborate on the availability of data resources and methodological issues in disaggregating energy‐intensive and trade-exposed sectors that receive larger attention in the public policy debate on unilateral emission regulation: non‐ferrous metals, iron and steel and non-metallic minerals. Our sensitivity analysis revolves around three types of unobserved heterogeneity at the sub-sectoral level: trade elasticities, energy consumption and technology specifications. Drawing on the example of border tax adjustments, we find that for all given technology specifications and variation in energy shares, the biggest differences emerge from variations in Armington elasticities. Even moderate changes in Armington elasticities can alter the magnitude and the sign of the effects at the sectoral level. The implications of sub‐sectoral disaggregation are not as pronounced for macroeconomic indicators and leakage as for sectoral indicators.

Keywords: Sectoral disaggregation, emissions trading, border adjustment, competitiveness, carbon leakage

JEL Classification: D58, H21, H22, Q48

Suggested Citation

Alexeeva-Talebi, Viktoria and Bohringer, Christoph and Löschel, Andreas and Voigt, Sebastian, The Value-Added of Sectoral Disaggregation: Implications on Competitive Consequences of Climate Change Policies (2012). ZEW - Centre for European Economic Research Discussion Paper No. 12-069, Available at SSRN: https://ssrn.com/abstract=2179011 or http://dx.doi.org/10.2139/ssrn.2179011

Viktoria Alexeeva-Talebi (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Christoph Bohringer

University of Oldenburg - Economic Policy ( email )

Centre for European Economic Research (ZEW) ( email )

D-68161 Mannheim
Germany
+49 6211235200 (Phone)
+49 6211235226 (Fax)

Andreas Löschel

University of Muenster - Chair of Microeconomics, esp. Energy and Resource Economics ( email )

Universitätsstr. 14-16
48143 Munster
Germany

HOME PAGE: http://www.wiwi.uni-muenster.de/eroe

Sebastian Voigt

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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