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Stranded Assets, the Social Cost of Carbon, and Directed Technical Change : Macroeconomic Dynamics of Optimal Climate Policy

van der Ploeg, Rick - 2016

The tractable general equilibrium model developed by Golosov et al. (2014), GHKT for short, is modified to allow for stock-dependent fossil fuel extraction costs and partial exhaustion of fossil fuel reserves, a negative impact of global warming on growth, mean reversion in climate damages,...

Persistent link: https://www.econbiz.de/10012996198

Robustness of a Simple Rule for the Social Cost of Carbon

Rezai, Armon - 2015

The optimal social cost of carbon is in general equilibrium proportional to GDP if utility is logarithmic, production is Cobb-Douglas, depreciation in 100% every period, climate damages as fraction of production decline exponentially with the stock of atmospheric carbon, and fossil fuel...

Persistent link: https://www.econbiz.de/10013033798

Dark Clouds or Silver Linings? Knightian Uncertainty and Climate Change

Chen, Yu-Fu - 2013

This paper examines the impact of Knightian uncertainty upon optimal climate policy through the prism of a continuous-time real option modelling framework. We analytically determine optimal intertemporal climate policies under ambiguity. Additionally, numerical simulations are provided to...

Persistent link: https://www.econbiz.de/10013092649

Global Warming and Extreme Events : Rethinking the Timing and Intensity of Environmental Policy

Chen, Yu-Fu - 2010

-probability extreme events on environmental policy in a continuous-time real options model with “tail risk”. In a nutshell, our results … indicate the importance of tail risk and call for foresighted pre-emptive climate policies …

Persistent link: https://www.econbiz.de/10013139799

On the Sensitivity of Collective Action to Uncertainty About Climate Tipping Points

Barrett, Scott; Dannenberg, Astrid - 2021

threshold is uncertain. Theory suggests that behavior should differ dramatically either side of a dividing line for threshold …

Persistent link: https://www.econbiz.de/10013315630

The Fatter the Tail, the Fatter the Climate Agreement - Simulating the Influence of Fat Tails in Climate Change Damages on the Success of International Climate Negotiations

Dekker, Thijs; Dellink, Rob; Ketterer, Janina - 2021

International climate negotiations take place in a setting where uncertainties regarding the impacts of climate change are very large. In this paper, we examine the influence of increasing the probability and impact of large climate change damages, also known as the ‘fat tail’, on the...

Persistent link: https://www.econbiz.de/10013315816

Climate Treaties and Approaching Catastrophes

Barrett, Scott - 2021

If the threshold that triggers climate catastrophe is known with certainty, and the benefits of avoiding catastrophe are high relative to the costs, treaties can easily coordinate countries’ behavior so as to avoid the threshold. Where the net benefits of avoiding catastrophe are lower,...

Persistent link: https://www.econbiz.de/10013315826

Race to Burn the Last Ton of Carbon and the Risk of Stranded Assets

van der Ploeg, Rick - 2018

. Finally, the mere risk of a cap on global warming being enforced at some unknown, future date makes fossil fuel extraction …

Persistent link: https://www.econbiz.de/10012927734

Second-Best Renewable Subsidies to De-Carbonize the Economy : Commitment and the Green Paradox

Rezai, Armon - 2016

Climate change must deal with two market failures: global warming and learning by doing in renewable use. The first-best policy consists of an aggressive renewables subsidy in the near term and a gradually rising and falling carbon tax. Given that global carbon taxes remain elusive, policy...

Persistent link: https://www.econbiz.de/10012997346

Evaluation of Long-Dated Investments Under Uncertain Growth Trend, Volatility and Catastrophes

Gollier, Christian - 2021

increasing term structure for the risk premium. It also implies that, under the assumption that the cummulants of the … investment is larger than half of relative risk aversion. Another important consequence of parametric uncertainty is that the … risk premium is not proportional to the beta of the investment. We apply these general results to the case of an uncertain …

Persistent link: https://www.econbiz.de/10013315817