Integration of the CLEWs model and OG-Core

[jdebacker]

This discussion is about integrating the CLEWs model with OG-Core.

As an initial pass, let me list some places for data objects to be passed back and forth between the two models:

Relevant OG outputs to be used as inputs to CLEWs:

• Investment, output by production sector (specificity of sector depends on data)
• Consumption by type of good (e.g., food, durables, services, etc -- can get more specific if needed)
  • These demands can be mapped to CLEWs demands
• Population
• Maybe prices for commodities used in resource production
  • e.g., cost of steel for coal power is determined by demands in the goods market
  • And interest rates matter

Relevant CLEWs outputs to be used in OG

• Carbon intensity by production sector (useful for analyzing a carbon tax)
• Mix of factors to produce goods: e.g., mix of coal and gas in energy production, that can be used to update the IO matrix in the OG model
  • Depends on level of detail in IO matrix
  • Also, we should revisit thinking about having intermediate goods in the production function
  • CLEWs can describe how gov't policy may change the mix of production like this -- and again this can be used to affect the IO matrix in OG
• Can we do anything with production costs?
• Not directly in OG, but could help with analysis from OG:
  • Land, water, and other resource use
• Tom says important to align on the investment flows
  • e.g., carbon tax imposed, in CLEWs this would spur investment in new green tech, but in OG, this increases cost of energy and would reduce investment
    • How would these be aligned?
    • Can you do something to represent this increase in investment? Are the economics really working out in the way Tom suggests-- would investment actually increase when costs are higher? Doesn't seem right, but maybe there's something in the dynamics
    • Maybe the thing is that we need different types of capital (e.g., green and dirty capital)
      • Or is differentiated industries enough (e.g, green energy and dirty energy and the relative prices change)

cc @rickecon @SeaCelo