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Peer Review of Economy-Wide Models
The Climate Change Division (CCD) of the U.S. EPA Office of Air and Radiation is responsible for economy-wide analysis of greenhouse gas mitigation bills and proposals for the Agency, the Administration and Congress. CCD uses two computable general equilibrium (CGE) models to conduct this analysis:
- "Applied Dynamics of the Global Economy" (ADAGE), developed and maintained by Resource Triangle Institute of Research Triangle Park, North Carolina.
(See http://cfpub.epa.gov/crem/knowledge_base/crem_report.cfm?deid=198000 for additional information on the ADAGE model) - "Intertemporal General Equilibrium Model" (IGEM), developed and maintained by Dale Jorgenson Associates of Cambridge, Massachusetts.
(See http://cfpub.epa.gov/crem/knowledge_base/crem_report.cfm?deid=198005 for additional information on the IGEM model)
In accordance with the Office of Management and Budget Information Quality Bulletin for Peer Review and the U.S. EPA Peer Review Handbook, CCD has undertaken a peer review of the models by a panel of external experts.
The peer review was coordinated by Industrial Economics, Incorporated, of Cambridge, Massachusetts. IEc selected the panel of experts in economic modeling who conducted the review.
The Review Panel summarized their findings in the following paragraph:
"On balance, these are two excellent models that provide useful information to EPA as it goes about its work of evaluating climate policies. While we may have issues with elements of the models, in general we find these to be first-rate and state-of-the-art. These models are essential tools for the analysis of environmental policy in general and climate policy in particular."
The panel made a number of suggestions for improvement. The IGEM and ADAGE modeling teams each prepared responses to the peer review report addressing the findings and discussing planned model improvements.
The final 63 page peer review report includes: the IEc Peer Review Documentation Memorandum; Report of the Peer Review Panel: "Peer Review of Computable General Equilibrium Models for Climate Change Analysis"; Response to Peer Review Panel prepared by Dale Jorgenson Associates regarding IGEM; Response to Peer Review Panel prepared by Resource Triangle Institute regarding ADAGE.
Download the economy-wide modeling peer review report: Final peer review report for IGEM and ADAGE (PDF) (63 pp, 1.2MB)