Emission Reductions Post Cap-and-Trade Implementation

3. Use the future trend of factors to forecast the CO2 emissions of detail industrial sector . • We estimate the relationship between emission of each sector and factors using: . = Yi,jtc+FA + ut • where A is a parameter matrix and u₁ is measurement error. Once we have estimated ĉ and Â, we can estimate the future movements of Yi,jt for period t = T + 1, ..., T+h, given the forecast of Ft. ==

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