## 2 Literature Review
Thirdly, if total demand is considered exogenous, neither the budget effect due to energy surcharges nor the increased consumption from households (due to RE labor income) will be considered (i.e., induced effects). Applying such standard demand-driven I-O model results in a gross impact study. However, a series of adjustments can be applied to overcome such limitations. Firstly, the model can be \"closed\" with respect to households so that additional labor income can be re-spent by consumers [10]. Secondly, price effects can be accounted by integrating it in an average consumption vector. Finally, negative changes in crowded-out sectors can also be included in this framework. A sophisticated cost-based IO model that includes such adjustments is implemented in this study (see Section 4). This approach has been firstly applied by [PERSON] [8]. The full economic assessment is a complex approach that can involve macroeconomic, trade, and energy modules and the application of macro-econometric or CGE (Computable General Equilibrium) modelling. These kinds of studies can aim at assessing all direct, indirect, and induced effects, including, for example, substitution effects in consumption and production due to changes in relative prices. They usually involve the simulation of alternative future scenarios, whose comparison represents a net impact. This complexity requires a large amount of data and assumed parameters (e.g., elasticities), and thus the quality of results hinges crucially on these. [PERSON] et al. [2] conclude that the full economic assessment approach is, theoretically, the most scientifically accurate and comprehensive, however, in practice, it is often not very feasible. The impact of \(EEG\) in Germany has been extensively analyzed in the literature. Net impact studies, which focused on the national level, have had contrasting results, leading to both negative assessments (e.g., [11; 12; 13; 14] and positive ones (e.g., [6; 15; 16]). Others have criticized the widespread optimism concerning the economic impact of \(EEG\) and highlight the increasing burden on consumers and the inefficiency in reducing CO\({}_{2}\) emissions [5; 17]. [PERSON] et al. [18], by applying a Computable General Equilibrium (CGE) model, find that promotion of renewable energy through surcharge may have minor benefits only when subsidies are low, otherwise significant welfare losses are generated. [PERSON] et al. [19] propose the financing of FiTs through uniformly increased VAT (value added tax) on all consumption goods, since such an alternative financing mechanism would reduce the macroeconomic costs of \(EEG\) and also the regressive effect on poorer households [20]. [PERSON] et al. [6] notice that the assumptions about international trade of RE technologies are the main drivers for such diverging results in the literature on the German case. In fact, when a low export scenario (a detailed description of international trade scenarios is given in [PERSON] et al. [15] where projections are based on surveyed market shares of 2007) is assumed, they even find a negative net impact. [PERSON] and [PERSON] [21] review several net employment effect studies, concluding that these are hardly comparable because of the complexity of their set of assumptions, methodologies, system boundaries, and policy scenarios. In particular, for the outcome of such analyses, they highlight the importance of dynamism of the RET sector (w.r.t. import and export structures, technological development), as well as the effects of the financing mechanism. The relevance of international trade in estimating the impact of RE deployment at the country level, has been investigated outside the German context as well. [PERSON] et al. [22] find that each euro invested in the RE sector, generated between 31 to 41% less value added in the Italian economy, compared to an average bundle of investment goods and services, because of the high reliance on imports for the RE sector. Similarly, [PERSON] et al.