Capros P., P. Karadeloglou, G. Mentzas and P. Valette (1989) "A New Modeling Framework for Energy-Economy Analysis in Europe", The Energy Journal, Vol. 10, No 4, October.
This paper presents the main theoretical and empirical issues concerning the HERMES-MIDAS Linked System (HMLS) of models. The systems are very large scale and are intended to perform European-wide medium-term investigations of the energy-economy interactions. The macroeconomic model follows the neo-Keynesian approach to economic modelling, while the set of energy demand and supply models follows a mixed engineering econometric one. We facilitate the presentation of the linkage by proposing a typical aggregate neo-Keynesian model into which we introduce energy and proceed by establishing a general framework for energy economy model linkages. This framework is applied to the coupling of the actual large-scale models. Finally, the policy analysis capabilities of the HMLS in contrast to the original HERMES model are examined by means of a theoretical and empirical comparison of the two systems' simulation properties and policy responses.
Paper available on request (hard copy only).
