Annex 1 - Macroeconomic, Poverty and Financial Appendix

Jul 19, 2026

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Annex 1 compiles the macroeconomic and poverty-related foundations used to assess climate and financial impacts for the Dominican Republic. It outlines the MANAGE (Mitigation, Adaptation and New Technologies Applied General Equilibrium) model, including growth drivers, investment closure, and the specification of households and firms. It further describes how climate change effects are translated into sectoral and poverty outcomes, and how physical and transition risks are methodologically treated, alongside approaches for greening the financial sector.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages25

Reading Time1 h 3 min

Annex 1: Macroeconomic Appendix

A1.1 The Mitigation Adaptation New Technologies Applied General Equilibrium (MANAGE) Model

A1.2 The Poverty Impacts of Climate Change

A1.3 Greening the Financial Sector in the Dominican Republic

1. Climate-related Risks to the Financial Sector

2. Physical risks methodology

3. Transition risks methodology

Public Disclosure Authorized Public Disclosure Authorized Annex 1: Macroeconomic, Poverty and Financial Appendix Contents Annex 1: Macroeconomic Appendix ..................................................................................................................... 1 A1.1 The Mitigation Adaptation New Technologies Applied General Equilibrium (MANAGE) Model............. 1 1 Model Details ....................................................................................................................................... 1 2 Climate Change impacts in the model .................................................................................................4 A1.2 The Poverty Impacts of Climate Change................................................................................................... 6 A1.3 Greening the Financial Sector in the Dominican Republic ..................................................................... 11 1. Climate-related Risks to the Financial Sector..................................................................................... 13 2. Physical risks methodology ................................................................................................................ 19 3. Transition risks methodology ............................................................................................................. 22 A1 .1 The Mitigation Adaptation New Technologies Applied General Equilibrium (MANAGE) Model 1 Model Details The Mitigation, Adaptation and New Technologies Applied General Equilibrium (MANAGE) model is a single-country recursive dynamic computable general equilibrium (CGE) model designed to focus on energy, emissions, and climate change economic impacts. It considers a large number of economic sectors, commodities, production factors, and household types. In addition, the MANAGE model includes a detailed energy specification that allows for capital/labor/energy substitution in production, intra-fuel energy substitution across all demand agents, and a multi-output, multi-input production structure. The drivers of growth in this model follow the neo-classical growth framework. The level of GDP depends on three factors: the supply of workers, investment, and productivity. The level of investment in the economy is determined through a savings-driven closure with exogenous propensity to save for households and firms. Foreign savings in foreign currency adjust to the expected domestic returns to capital and the public debt to GDP ratio. The nominal exchange rate is fixed. The real exchange rate adjusts to maintain the current account balance. Investment is distinguished between public and private sector investments. Households The model contains five representative household types (defined by income quintiles). Households derive their income from factor payments, transfers, and returns on government bonds. Each household supply four types of labor (distinguished by formal/informal and skilled/unskilled) and receives income from capital, land, and natural resources. The aggregate payment of each factor of production is distributed across households based on their shares in the respective factor income. An additive Constant Elasticity of Transformation (CET) function determines the allocation of disposable income between consumption and savings depending on the return of savings (investment), Household demand is modeled using a two-level utility function. At the first level, a Constant Difference in Elasticities (CDE) utility function determines the demand for aggregated consumption commodities. The use of CDE allows better representation of both income and own-price elasticities by allowing consumption shares to change as income and prices change. At the second level a transition matrix approach is used where each consumed good is composed of one or more supplied goods and combined using a CES aggregator. Energy demand is bundled into a single comm

FAQs

What is the MANAGE model and what does it focus on?

The MANAGE model is a single-country recursive dynamic computable general equilibrium model designed to analyze energy, emissions, and the economic impacts of climate change.

How does the annex represent households and demand in the model?

It uses five representative household types by income quintiles and models income from factor payments, transfers, and government bonds. Household demand is captured with a two-level utility structure combining CDE for aggregated consumption and CES-based disaggregation by energy type.

How are climate-related risks and energy-finance links assessed?

The annex separates climate-related risks into physical and transition risks and presents distinct methodologies for each. It also describes how production energy intensity can be determined endogenously from energy prices, supporting analysis of carbon pricing and financial sector greening.

Jul 19, 2026

Upload by Hazel