Assessing the Validity of CGE Modelled Impacts of the Federal Climate Policies on the Saskatchewan E

To determine if the economic impacts of federal climate policies for the nation and the provinces and territories, the federal government and many provinces have invested in the capacity to model carbon emissions and adjustments in the economy. [...] 6 Provincial Economies as Described by Eccc Ec-Pro Cge Model The power of the CGE models like those applied by ECCC is the level of detail in terms of numbers of sectors of production, the model’s micro-theory foundations and its computational complexity.13 The limitations of the models is that the trade-off of having more sectoral detail and complex calculations is that the model relies highly re. [...] In the case of the labour market, this means that in response to changes in labour demand from the climate policy, the real wage adjusts to be equal across sectors within the region and the equilibrium wage reduces to ensure full employment of the exogenously determined labour supply. [...] The rectangle between the labour supply curve and the vertical axis, between the wage paid by the employer and that received by the worker is the total tax revenue. [...] Now the climate policy has a GDP cost that includes the wage bill of the labour at w* that is no longer in the province because of the policy, and the loss of employers’ surplus (resource income) due to the loss of labour supply.