The primary data requirements of the model

To calibrate the parameters¹³ of the GEM-E3 model, one has to get benchmark year data on the production technology (incl. emission of air pollutants), consumer preferences (patterns), prices, income distribution, savings and final demands. Concretely, these data can be derived from the following datasets, which list shows the primary data requirements of the model:

1. ‘Symmetric’ I-O table at basic prices and supplementary tables (import matrix if in the original table import and domestic flows are not added together, matrix of indirect taxes and subsidies, e.g. of the import duties)

2. Import duty matrix (import duties by commodity groups and supplier countries). It is not always necessary (the vector break-down by commodity groups suffices), since it is assumed that all duties are imposed on the imports from the ROW (within the EU there are no such duties), but when some countries joined the EU since the benchmark year (see the accession countries in 2004 and 2007) it can be very useful to separate out those duties which were applied to the trade with them (and then it has to be decided whether the model is to be run so as if these countries had been already members in the benchmark year).

3. Foreign trade matrices (exports and imports by commodity groups and partner countries). Usually the rows represent the commodity groups and columns the countries (or group of countries). For the model each of the 27 EU-countries (although Belgium and Luxembourg need not be split) have to be treated separately, while the other countries need not be broken down, so they will form the "Rest of the World" in the model. The bilateral import matrix is similar but by definition it refers to the import flows.

4. Consumption transformation matrix (consumption by categories and branch of origin, the last row and column show the VAT and consumption taxes by category and branch respectively). Therefore the consumption matrix translates the demand per consumer categories into deliveries by branch.

5. Investment transformation matrices by institutional sectors (for each institutional sector the matrix shows the investment by branch of origin and by investing /destination/ branch).

Investment Matrix. Thefore the investment matrix translates the demand of investment goods by branches into deliveries by branches. The matrix, which has been constructed to portray the investment transactions between sectors of the United Kingdom Economy, is showed in Appendix 5.

6. Income distribution (national accounts) data, more specifically:

6/a: by branches: output, value added and its primary distribution /wages, social security, production taxes, production subsidies, operating surlus (preferably the amortization too)

6/b: by institutional sectors: income-expenditure balance sheets (incl. saving and invest-ment).

13 The list and meaning of these parameters can be found in the Para-dyn.prn file.

7. Environmental data. The environmental data needed for GEM-E3 cover four types of data:

7/a: emission coefficient per type of activity for the pollutants in the model, CO2, SO2, NOx, VOC and PM (suspended particulates)

7/b: marginal abatement cost functions (including the parameters for the input structures) for the pollutants SO2, NOx, VOC and PM

7/c: pollutants’ transformation and transportation between countries coefficients to arrive at air concentration and deposition

7/d: damage per pollutant and its monetary valuation

Since there are no end-of-pipe-technologies for reducing greenhouse gases at reasonable costs, the end-of-pipe abatement technologies considered in GEM-E3 are limited to the primary pollutants SO2, NO^x, VOC and particulates.

In GEM-E3 we distinguish twenty emission relevant sectors (firms) or uses (households):

the 18 branches, the heating systems of households and private traffic. A distinction has been made between emissions linked to production and emission linked to energy consumption with the same specification of the cost function.

8. Auxiliary data (factor endowment data, interest rates, inflation rate in the base year, demographic data, foreign tourists’ domestic consumption expenditure by supplier branches and the related VAT and consumption tax, energy balance sheets, energy taxes, stocks of energy consuming durable goods, share of gasoline and gas-oil within motor-fuel demand, share of non-energetic use of the energy carriers, etc.)

9. Data for special extensions of the model (multiple households, financial module, imperfect competition, etc.)

The GEM-E3 model needs the above data in the following break-downs:

The GEM-E3 model identifies the following products/sectors:

NO. Sector Name NACE-CLIO R25 aggregation

(see the names in Appendix 1)

1 Agriculture 010 Agriculture, forestry and fishery

products

2 Coal of 060:

031 Coal and coal briquettes 033 Lignite and lignite briquettes 050 Products of coking

3 Crude oil and refined oil products of 060:

071 Crude petroleum

073 Refined petroleum products

4 Natural gas of 060:

075 Natural gas

098 Manufactured gases

5 Electric Power of 060:

097 Electric Power 110 Nuclear fuels

099 Steam, hot water, compressed air 6 Ferrous and non-ferrous ore and metals 130

7 Chemical products 170

8 Other energy intensive industries 150 Non-metallic mineral products

190 Metal products except machinery &

transp

470 Paper and printing products

9 Electrical goods 250

10 Transport equipment 280

11 Other equipment goods 210 Agricultural and industrial machinery 230 Office and data processing machines, etc.

12 Consumer goods industries 360 Food, beverages, tobacco

420 Textile & clothing, leather, footwear 480 Other manufacturing products 490 Rubber & plastic products 13 Building & construction 530

14 Telecommunication services 670

15 Transport 610 Inland transport services

630 Maritime & air transport services 650 Auxiliary transport services

16 Credit & insurance 690

17 Other market services 560 Recovery, repair services, wholesale &

retail trade

590 Lodging and catering services 740 Other market services

18 Non-market services 860

The classification of the consumption of households by purpose (‘wants’ or categories) is listed in the table bellow (ND stands for non durables and D for durables):

N o

Purpose Name Status EUROSTAT code

1

Food, Beverages and Tobacco N D

Housing Furniture and Operation N D

Medical Care and Health Expenses N D

Operation of Transport Equipment N D datasets or details are missing, one has to apply certain (proportionality, etc.) assumptions. In case of inconsistencies certain balancing methods (e.g. RAS) can be applied. In case of different classifications one has to apply certain transformation techniques.