Title: The green transition: Directed technical change towards decarbonization
Authors: Oriol Valles Codina - UCL Institute for Innovation and Public Purpose, New School for Social Research (United States) [presenting]
Abstract: The Flaschel-Semmler dynamical model of multi-sectorial growth is employed to study the substitution of carbon sectors by green sectors, that is, the Green Transition, under directed technical change. The Flaschel-Semmler model of linear production is based on the dynamic cross-dual linear adjustment between prices and quantities in the form of a law of excess demand and law of excess profitability, which produces a complex pattern of oscillations around their equilibrium values. The linear adjustment coefficients of the model are empirically calibrated for six countries using EU KLEMS and WIOD data. The paper concludes by evaluating analytically and computationally the tax rates that allow decarbonization to meet the targets of the UN Intergovernmental Panel on Climate Change. Directed technical change is enforced by a revenue-neutral, pro-active fiscal policy of a tax-subsidy form, which affects to greatly accelerate the phase-out of the carbon sector, in particular at its earliest stages. Without fiscal policy, no economy can reach the IPCC targets.