Economics
Economic module and production function
Gross and net GDP
The core of the model is the economic module, detailing how GDP, investments and consumptions vary over time. We use a traditional Cobb-Douglas production function. This means that the gross GDP is calculated by:
$$ \text{GDP}_{\text{gross},t,r} = \text{TFP}_{t,r} \cdot L^{1-\alpha}_{t,r} \cdot K^{\alpha}_{t,r}, $$ with \(\text{TFP}\) the total factor productivity (exogenously calibrated from the baseline SSP scenarios) \(L\) the labor (represented by the total population), \(K\) the capital stock and \(\alpha\) the share of capital in the production function.
Source code in mimosa/common/economics.py
The net GDP is then calculated by subtracting the damages and mitigation costs from the gross GDP. (Note that in MIMOSA, the damages are expressed as a fraction of the gross GDP, whereas the mitigation costs are expressed in absolute terms.)
Investments and consumption
This net GDP is then split in a part of investments (\(I_t\)) and a part of consumption (\(C_t\)), according to a fixed savings rate (\(\text{sr}\)):
Capital stock
The capital stock \(K_t\) grows over time according to the investments and the depreciation of the capital stock:
with the change in capital stock calculated by:
Since this only gives the change in capital stock, we need to add the initial capital stock to get the actual capital stock. This is calculated as a region-dependent multiple of the initial GDP:
The initial capital stock factor is a calibration factor to obtain the initial capital stock. TODO: Source (IMF)
Parameters defined in this module
init_capitalstock_factor
alpha
: Output elasticity of capital. Type: float. Default: 0.3. Min: 0. Max: 1.dk
: Yearly depreciation rate of capital stock. Type: float. Default: 0.05. Min: 0. Max: inf.sr
: Fraction of GDP used for investments. Type: float. Default: 0.21. Min: 0. Max: 1.ignore_damages
: Flag to not take into account the damages in the GDP (but damages are calculated). Type: bool. Default: False.
Source code in mimosa/components/cobbdouglas.py
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