North American General Equilibrium Model

NAGEM is the new generation dynamic macroeconomic model able to simulate a deep transformation of the economy to achieve ambitious objectives of GHG reduction. This is the first model in Canada applied to identify economy transformation pathways for net-zero scenarios. It can be used as a standalone model or with NATEM.

A dynamic multi-region economic model

NAGEM is composed of detailed economic models of the 13 Canadian jurisdictions, including inter-jurisdictional flows of trade and labour. The model starts from the baseline year reflecting the structure of the Canadian economy being in equilibrium. Regional Social Accounting Matrixes (SAM) capturing all economic transactions in each jurisdiction in a single year serve as a dataset backbone for NAGEM.

The model accounts for the inter-dependencies between different sectors, economic agents (industries, households, provincial and federal governments) and markets in the economy. Energy and climate policies are modelled and NAGEM derives the optimal economic solution by converging to a new set of prices, allocation of goods, capital and labor to allow economic equilibrium.

The impact of new policies is estimated by comparing the economy before and after the shock. NAGEM Canada is a dynamic CGE model that is able to model the economic adjustment during the considered time horizon to the new steady-state solution providing a deeper understanding of the economic transformation induced by a new policy. Used in standalone mode or coupled with the North American TIMES Energy Model (NATEM), the most detailed techno-economic model of North America, NAGEM Canada suits to evaluate the impact of energy and climate policies on economic growth, public welfare, and employment in Canada, its provinces and territories.

NAGEM model’s results have been used by decision makers from public and private organizations to:

  • Evaluate the economic impact and efficiency of carbon tax
  • Identify the impact of major sectorial investment on jobs creation and prices
  • Advise on labor challenges, including labor shortages
  • Help to moderate concentrated unemployment
  • Identify economy-optimal policies pathway to achieve net-zero objectives

Detailed simulations of economic transformations

For each jurisdiction, NAGEM accounts for more than 520 products and 260 industries, including products and industries from national accounts as well as new low-carbon products and activities that are mandatory for successful low-carbon transition.

NAGEM also accounts for more than 100 expense categories for households, including energy expenses for conventional and novel fuels. The model represents the Canadian labor market by relying on the National Occupation Classification (NOC) categorizing workers by their skills and diploma levels as well as extensive databases built by ESMIA for each jurisdiction and industry.

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