The key macro-economic drivers of the baseline are based on a number of existing baselines. Population and labor growth are calibrated to the United Nation’s Population Division 2015 projection, the medium variant.<sup>28</sup> The near-term GDP projections, through 2020, use the latest World Bank Global Economic Prospects (GEP) forecast.<sup>29</sup> Beyond 2020, the baseline is calibrated to the so-called Shared Socio-Economic Pathway (SSP) 2, or SSP2. The SSPs, of which there are 5, have been developed by the Integrated Assessment Modeling (IAM) Community to provide a macroeconomic framework for quantitative analysis of the economics of climate change.<sup>30</sup> Three economic modeling groups have quantified global GDP projections: the Organisation for Economic Co-operation and Development (OECD), the International Institute for Applied Systems Analysis (IIASA), and the Potsdam Institute for Climate Impact Research (PIK). All three teams harmonized to the same demographic projections provided by IIASA’s demographic unit. For our purposes, we are using the OECD-based SSP2 projection. SSP2, also referred to as the ‘middle of the road’ scenario, is being treated by many modeling groups as a business as usual scenario.

Labor force growth is equated with the growth rate of the population cohort ages 15-64, sometimes referred to as the working-age population. The GEP forecast is used to project real GDP growth from 2014-2020. The SSP2 projection is used to project real per-capita GDP growth, complemented by the UN population projection.<sup>31</sup> We target real GDP growth by calibrating labor productivity in the baseline. We allow for sector differences in labor productivity growth, with a (fixed) higher rate in agriculture and manufacturing, relative to services. Other factors that impact calibrated labor productivity include an exogenous improvement in energy efficiency, agricultural yields, and international trade and transport margins.

The baseline also incorporates the following list of exogenous assumptions:

- Bilateral tariff rates are modified over time according to a schedule of tariff rates prepared by the ITC (2015). This schedule is based on existing trade agreements. More details are available from the authors.

- The income parameter of the CDE is adjusted between periods based on an estimated economic relation between the income parameter and aggregate per capita consumption. The parametrization of the relationship is based on a least-squares estimate using the base year GTAP database. One key purpose is to reduce the share of food expenditures as incomes rise.

- Capital accumulation is based on the standard capital motion equation: _Kt_ =(1- δ ) _K_ t-1+ _It_ -1, thus the capital stock trends depend on investment/savings decisions. In the baseline, household savings are adjusted in order to target future trends in the investment to GDP ratio—with the basic idea that these trends should more or less line up with steady state

> 28  http://www.un.org/en/development/desa/publications/world-population-prospects-2015-revision.html

> 29 _Global Economic Prospects, January 2018: Broad-Based Upturn, but for How Long?_ Advance edition. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 IGO (https://openknowledge.worldbank.org/bitstream/handle/10986/28932/9781464811630.pdf).

> 30  A Special Issue of _Global Environmental Change_ provides significant background material on the SSPs and their development. See in particular Dellink et al. 2017 for a discussion of the OECD-based macroeconomic drivers.

> 31  In other words, we overlay SSP2’s population projection with the UN’s, but assume the same growth rate of GDP in per capita terms.

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