Environmental Policy Under Model Uncertainty : A Robust Optimal Control Approach

Model uncertainty is inherent in the design of optimal environmental policy. We investigate the consequences in a simple linear model, where the aim of the policymaker is to stabilize the carbon content of the atmosphere. We study how decision-makers' concerns about robustness alter policy using the Hansen and Sargent (2000, 2003, 2007) approach. The analysis shows that a policymaker who fears model misspecification should react more aggressively to changes in the stock of atmospheric carbon and implement policies which deliver a greater reduction of emissions

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Year of publication:	[2021]
Authors:	Funke, Michael ; Paetz, Michael
Publisher:	[S.l.] : SSRN
Subject:	Umweltpolitik \| Environmental policy \| Kontrolltheorie \| Control theory \| Robustes Verfahren \| Robust statistics \| Entscheidung unter Unsicherheit \| Decision under uncertainty \| Klimaschutz \| Climate protection \| Risiko \| Risk

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