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

Abstract

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 tradeexposed 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.

On the suitability of input–output analysis for calculating product-specific biodiversity footprints

“…Aggregation error is a well-studied topic in IO analysis (Andrew et al, 2009;Lenzen, 2011;Steen-Olsen et al, 2013) and generally is held to be a manageable problem (Alexeeva-Talebi et al, 2012;Caron, 2012), mostly to be solved by using newer, higher resolution IO tables such as Eora. Nevertheless, this issue of sectoral detail is particularly relevant for our study.…”

The Effect of Aggregation Bias: AnNTB‐modelling Analysis of Turkey's Agro‐food Trade with theEU

“…The importance of using different data aggregation levels in CGE models and its related effect on simulation results are also acknowledged by several authors (e.g. Grant et al., , ; Charteris and Winchester, ; Alexeeva‐Talebi et al., ; Brockmeier and Bektasoglu, ). Considering NTBs for the policy analysis of RTAs are predominantly done by conducting two‐stage analysis; first, the effects of NTBs are estimated using the gravity approach, and then, they are implemented in CGE or partial equilibrium models (e.g.…”

Assessment of Energy-Related Technological Shocks Within a CGE Model for the Polish Economy

“…Bureau and Salvatici [2003] as well as Lloyd and Maclaren [2004] noted, however, that one of the main disadvantages of the CGE framework is its insufficient sectoral dimension. As argued by Grant et al [2006] and Alexeeva-Talebi et al [2012], excessive aggregation misses important details and insights on product specificity (unobserved heterogeneity) at the sectoral level and may lead to model misspecification. Narayanan et al [2010] associated this unobserved heterogeneity with variations in the structural characteristics of the omitted subsectors (e.g.…”