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National Energy Modeling System (NEMS) Documentation Archive

Macroeconomic Activity Module - NEMS Documentation

July 19, 2018


The National Energy Modeling System (NEMS) is a comprehensive, mid–term energy forecasting and policy analysis tool used by the EIA. The NEMS projects energy supply, demand, prices, and environmental emissions, by region, given assumptions about the state of the economy, international markets, and energy policies. The Macroeconomic Activity Module (MAM) links the NEMS to the rest of the economy by providing projections of economic driver variables for use by the supply, demand, and conversion modules of the NEMS. The MAM’s baseline economic projection contains the initial economic assumptions used in the NEMS to help determine energy demand and supply. The MAM can also provide the NEMS with alternative economic assumptions representing a range of uncertainty about economic growth. Different assumptions regarding the path of world oil prices or of the penetration of new technologies can also be modeled in the MAM. The resulting economic impacts of such assumptions are inputs to the remaining supply and demand modules of the NEMS (Table B14 in Appendix B on page 127). Outside of the Annual Energy Outlook (AEO) setting, the MAM represents a system of linked modules capable of assessing the potential impacts on the economy of changes in energy events or of policy proposals as specified by a non–EIA requestor. These economic impacts result from assumptions about energy events resulting from policy proposals built into the NEMS. The linked modules of the NEMS then iterate to a solution.

This report documents the objectives and analytical approach of the MAM that is used to develop the Annual Energy Outlook for 2018 (AEO2018). It serves as a reference document providing a description of the MAM used for the AEO2018 production runs for model analysts, users, and the public. It also facilitates continuity in model development by providing documentation from which energy analysts can undertake model enhancement and modifications. This documentation report is divided into two separate components.

Part A presents the structural models comprising the MAM. These include:

  • IHS Markit’s model of the U.S. economy
  • IHS Markit’s models of industrial output and of employment by industry
  • U.S. Energy Information Administration’s models of the regional economies

Part B focuses on the MAM’s interface with the NEMS. This section identifies the set of model levers and simulation rules used to operate the system. It also provides a discussion of three types of integrated simulations carried out with the NEMS. This section also views the MAM from the perspective of a programmer focusing on the ties that link the various models together to form the MAM and how the MAM communicates with the NEMS.

Appendices A and B provide detailed information on variable listings and sectoral definitions.

Appendix C provides a detailed listing of the equations for the regional models.

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