GEMMES: A new modelling tool that incorporates the energy transition

AFD is developing a new tool to make macro-economic models, called GEMMES. What’s special about it? Within its scenarios, it can incorporate financial and monetary risks and their interaction with the impact of ecological disturbances. Special attention is paid to the consequences of global warming and to the increased scarcity of extractive natural resources in particular. GEMMES is thus an especially suitable tool for the political decision-making made necessary by the Paris Agreement (COP 21).
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    The Sustainable Development Goals (SDGs) and the Paris Agreement, embodied politically by the NDCs (Nationally Determined Contributions), give all countries a new common agenda to reach a sustainable world. The Stern-Stiglitz report, as well as the Deep Decarbonization Pathways Project and the experience of AFD partner countries, suggest that the reduction of greenhouse gas emissions and especially adaptation to ecological disturbances are one of the absolute conditions for attaining shared prosperity.

    But how can this be attained within a background of financial and monetary deterioration and given the growth in inequalities? Our economists have developed a new quantitative modelling tool, called “General Monetary and Multisectoral Macrodynamics for the Ecological Shift” (GEMMES). Its purpose is to help in making informed macroeconomic decisions regarding these decisive issues. GEMMES makes it possible to combine the impact of global warming and the increased scarcity of natural (energy and mineral) resources with the dynamics of capital, private and public debts, and under-employment. Finally, it takes into consideration the way in which the reduction of inequalities facilitates the resilience of a national or regional economy.

    There are currently three versions of GEMMES: one at the global level, one at the European level, and a third version adapted to the Brazilian economy. Other GEMMES model applications are being studied for
    Côte d’Ivoire, Vietnam, and Colombia. Their specific features are being developed thanks to partnership with local economists.

    To find out more:
    Read the interview on the GEMMES model with Gaël Giraud, AFD’s Chief Economist at AFD, in our 2016 Activity Report.

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