by Keith Hall
Mercatus Center
April 15, 2014
This comment addresses the Environmental Protection Agency’s request for advice in “developing an ‘analytic blueprint’ of materials on the technical merits and challenges of using economy-wide models to evaluate the social costs, benefits, and economic impacts associated with the EPA’s air regulations.” The agency plans to present these materials to a new Science Advisory Board (SAB) panel with “expertise in economy-wide modeling.” The quality of the results from simulation models, including economy-wide models, are strongly dependent on the quality of the input. Transparency and model-quality are also critical. Economy-wide models should be used to study the employment effects of regulations, which often extend into occupations and industries beyond the one directly regulated. The SAB panel should also consider the issue of modeling nonmarket benefits and distributional effects. Most economy-wide models are static, and the panel should offer advice to the agency on attempting to model dynamic effects of regulations.

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