The synthesis of bottom-up and top-down approaches to climate policy modeling: Electric power technology detail in a social accounting framework

“Hybrid” climate policy simulations have sought to bridge the gap between “bottom-up” engineering and “top-down” macroeconomic models by integrating the former's energy technology detail into the latter's macroeconomic framework. Construction of hybrid models is complicated by the need to numerically calibrate them to multiple, incommensurate sources of economic and engineering data. I develop a solution to this problem following Howitt's [Howitt, R.E., 1995. Positive Mathematical Programming, American Journal of Agricultural Economics 77: 329-342] positive mathematical programming approach. Using data for the U.S., I illustrate how the inputs to the electricity sector in a social accounting matrix may be allocated among discrete types of generation so as to be consistent with both technologies' input shares from engineering cost estimates, and the zero profit and market clearance conditions of the sector's macroeconomic production structure. © 2006 Elsevier B.V. All rights reserved. JEL classification: C680; Q400; Q540