Table B3: Parameter description, calibration, and restrictions (Part B)

|Parameter|Description|Value|Restriction such that|
|---|---|---|---|
|Steady-state par|ameters|||
|_g_|Deterministic growth rate|1.0083|Calibrated to empirical equivalent|
|Π_Y_|Price infation rate|1.0199|Calibrated to empirical equivalent|
|Π_H_|High-skilled wage infation rate|1.0282|Calibrated to Π_Y_ +_g −_1|
|Π_L_|Low-skilled wage infation rate|1.0282|Calibrated to Π_Y_ +_g −_1|
|_R_|Policy rate|1.0219|Calibrated to empirical equivalent|
|_RW_|Interest rate in the RoW|1.0036|Calibrated to empirical equivalent|
|_CG_|Gov. cons.-GDP ratio|0.14|Calibrated to empirical equivalent|
|_IGZ_<br>|Gov. inv. in core goods-GDP ratio|0.036|Calibrated to empirical equivalent|
|_I_<sup>_inf_</sup><br>_GR_|Gov. infra. inv. in renew. energy-GDP ratio|0.001|Calibrated to empirical equivalent|
|_I_<sup>_gen_</sup><br>_GR_<br>|Gov. gen. inv. in renew. energy-GDP ratio|0.001|Calibrated to empirical equivalent|
|_I_<sup>_inf_</sup><br>_GF_|Gov. infra. inv. in fossil. energy-GDP ratio|0.001|Calibrated to empirical equivalent|
|_I_<sup>_gen_</sup><br>_GF_|Gov. gen. inv. in fossil energy-GDP ratio|0.001|Calibrated to empirical equivalent|
|_E_ <sup>ˆ</sup>_BW /_ <sup> ̃</sup>_GDP_|RoW net debt-GDP ratio|-1.6|Calibrated to empirical equivalent|
|_Y _<sup>_∗_</sup>|Final demand in the RoW|1|Normalized|
|_p_<sup>_∗_</sup><br>_Z_|Core goods price in the RoW|1|Normalized|
|_p_<sup>_∗_</sup><br>_O_|Carbon supply cost|0.07|Restricted s.t. _E_ ̃_p_<sup>_∗_</sup><br>_O_<sup>_O/GDP_ =</sup><br>_PFES/GDP_|
|Steady-state targ|ets|||
|_GDP_|GDP|1|Normalized|
|_E_|Real exchange rate|1|Normalized|
|_LH/LL_|High-low-skilled labor ratio|1|Calibrated to empirical equivalent|
|_LR/LF_|Renew.-fossil employment ratio|0.15|Calibrated to empirical equivalent|
|_EL_|Employment rate|0.708|Restricted s.t. _ψL ≡ψH_|
|_IP Z/GDP_|Private core investment-GDP ratio|0.233|Calibrated to empirical equivalent|
|_IP R/GDP_|Renew. investment-GDP ratio|0.003|Calibrated to empirical equivalent|
|_IP F/GDP_|Fossil investment-GDP ratio|0.004|Calibrated to empirical equivalent|
|_CEZ/Z_|Wage share of output in core frms|0.39|Calibrated to empirical equivalent|
|_CEE/E_|Wage share of output in energy frms|0.08|Calibrated to empirical equivalent|
|_BP/GDP_|Corp. bonds-GDP ratio|2.3|Calibrated to empirical equivalent|
|_pERER/pEF EF_|Renew.-fossil energy ratio|0.2|Calibrated to empirical equivalent|
|_O/GDP_|Carbon intensity of GDP as kg of CO2 per<br>USD|0.46|Calibrated to empirical equivalent|
|_EY/EZ_|Energy cons. of households-frms ratio|0.94|Calibrated to empirical equivalent|
|_pEE/GDP_|Total fnal energy cons. exp.-GDP ratio|0.067|Calibrated to empirical equivalent|
|_M/GDP_|Total imports-GDP ratio|0.26|Calibrated to empirical equivalent|
|_CH/CL_|High-low-skilled consumption ratio|2|Calibrated to empirical equivalent|
|_uZ_|Cap. utilization|1|Calibrated to empirical equivalent|
|_BG/GDP_|Gov. bonds-GDP ratio|1.32|Calibrated to empirical equivalent|
|_PFES/GDP_|Fossil primary energy supply exp.-GDP ratio|0.04|Calibrated to empirical equivalent|

_Notes_ : RoW stands for the rest of the world. Data sources reported in the main text.

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