This paper investigates the economic impacts of induced technological change(ITC) on Korean economy by using endogenous computable general equilibrium model as in Goulder and Schneider(1999). This study shows that ITC has significant effect on the aba...
This paper investigates the economic impacts of induced technological change(ITC) on Korean economy by using endogenous computable general equilibrium model as in Goulder and Schneider(1999). This study shows that ITC has significant effect on the abatement policy as well as the Korean economy growth. We find that ITC reduces the emission abatement cost by 43% and GDP loss ly 1%p in the short run. In the long run, abatement cost is further declined up to the reduction cost of 73% and GDP loss of 1.8%p. Even though ITC reduces the cost, the total economic cost of greenhouse gas abatement policies still arise due to two effects: trade-off effect between R&D and abatement cost, and crowding-out effect of R&D on investment on physical capital.