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An Applied General Equilibrium Model for the Analysis of Environmental Policy: SAGE v1.0 Technical Documentation

Paper Number: 2018-05

Document Date: 10/2018

Author(s): Alex L. Marten and Richard Garbaccio

Subject Area(s): Benefit-Cost Analysis, Modeling

JEL Classification: D61, Q52

Keywords: general equilibrium, social cost, modeling

Abstract: SAGE is an applied general equilibrium model of the United States economy developed for the analysis of environmental regulations and policies. It is an intertemporal model with perfect foresight, resolved at the sub-national level. Each of the nine regions in the model, representing the nine census divisions, has five households based on income quintiles. A single government agent levies taxes on labor earnings, capital earnings, production, and consumption. As with many applied general equilibrium models used for the analysis of U.S. environmental and energy policies, the baseline is calibrated to the Energy Information Administration's Annual Energy Outlook. The model is solved as mixed complementarity problem (MCP) using the General Algebraic Modeling System (GAMS).

This paper is part of the Environmental Economics Working Paper Series.

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