DEFINE-SIMPLE

Interface

DEFINE-SIMPLE is a simplified module of DEFINE that shows how consumption and investment decisions can affect the path of key economic variables and carbon emissions. A brief description of the DEFINE-SIMPLE module is available here. The R code of the module can be downloaded hereThis web interface allows you to use DEFINE-SIMPLE to explore the effects of the following key factors:

  • An increase in the autonomous component of the ratio of green investment to total investment after 2022: The higher this ratio the lower the carbon intensity and the lower thereby the emissions for a given level of GDP.

  • The interest rate on green loans after 2022: A decline in the interest rate on green loans leads to an increase in green investment compared to conventional investment, generating a decline in carbon intensity.

  • The interest rate on conventional loans after 2022: An increase in the interest rate on conventional loans leads to an increase in green investment compared to conventional investment.

  • A change in the propensity to consume out of disposable income after 2022: With everything else given, the higher the propensity to consume, the higher the rate of economic growth and the higher the generation of emissions.

  • A change in autonomous investment (relative to capital stock): With everything else given, the higher the autonomous investment, the higher economic growth and the higher the generation of emissions for a given carbon intensity.

Note:  In this interface it is assumed that without any change in the parameter values economic growth remains constant throughout the simulation period. An increase in the interest rate causes an increase in economic growth because households receive all the profits of banks and the propensity to consume is the same for all sources of income (which effectively implies that the propensity to consume out of capital income is relatively high). The module does not include the feedback effects of climate change on economic growth. These effects are incorporated in DEFINE, but have been assumed away in the interface for simplification purposes.