Energy Price Shocks and Stabilization Policies in a Multi-Agent Macroeconomic Model for the Euro Area

Warming the MATRIX: a Climate Assessment under Uncertainty and Heterogeneity

“…This work extends the MATRIX model (Ciola et al, 2023;Turco et al, 2023) to perform analyses akin to the Integrated Assessment literature, providing coupled dynamics for climate and economic systems. Given the substantial uncertainty surrounding relevant factors related to anthropogenic climate change (Pindyck, 2013), the modeling strategy entails an agnostic and exible approach, which nests dierent carbon cycle modules, as well as climate damage and abatement cost functions.…”

“…The Multi-Agent model for Transition Risks the MATRIX model (Ciola et al, 2023;Turco et al, 2023) is an agent-based stock-ow consistent macroeconomic model developed to analyze the functioning of real-world economies with a focus on energy production and consumption. Under the assumption of an economic system comprising a multiplicity of heterogeneous agents, the model generates the endogenous dynamics of the simulated economy from their decentralized interactions in dierent markets.…”

“…Since the focus of this work is on the economic consequences of climate change and mitigation policies for the EA economy, we employ the European calibrated version of the MATRIX model (Turco et al, 2023) as the Business-as-Usual (BAU) scenario for our analysis.…”

“…11 At the same time, we calibrate the consumption of fossil fuels and emission intensities of the model to replicate EA data. On the one hand, we follow Ciola et al (2023) and Turco et al (2023) to set the sectoral factor shares using the symmetric input-output tables at basic prices of Eurostat. In particular, we divide the 65 main activities of the dataset (European Classication of Economic Activities NACE Rev.…”

“…The goal of this paper is to assess the economic impacts of climate change and mitigation policies, taking into account the role of uncertainty and heterogeneity in climate and economic systems. To do that, we propose a climate extension of the Multi-Agent model for Transition Risks (MATRIX) described in Ciola et al (2023) and Turco et al (2023).…”