Climate economics has been criticized for ignoring uncertainty, catastrophic changes, and tipping points (Stern 2016). The present paper addresses these issues. We consider multiple climate shocks which are recurring, random, uninsurable, and potentially large. The associated damages and the...

Climate physics predicts that the intensity of natural disasters will increase in the future due to climate change. One of the biggest challenges for economic modeling is the inherent uncertainty of climate events, which crucially affects consumption, investment, and abatement decisions. We...

The paper derives general rules for equitable burden sharing in international climate policy. The focus is on a new social climate contract between developed and less developed countries (LDCs) which preserves competitiveness of the former and the ”right to development” of the latter. We...

Soils are often subject to environmental shocks which are caused by negative extern- alities linked to overexploitation. We present a stochastic model of a dynamic agricultural economy where natural disasters are sizeable, multiple, and random. Expansion of agricultural activities raises...

We derive the optimal contributions to global climate policy when countries differ with respect to income level and pollution intensity. Countries' growth rates are determined endogenously, and abatement efficiency is improved by technical progress. We show that country heterogeneity has a...

Countries with strict immigration policies often resort to deportation measures to reduce their stocks of illegal immigrants. Many of their undocumented foreign workers, however, are not deported but rather choose to return home voluntarily. This paper studies the optimizing behavior of...

The use of climate information in economic activities, typically provided by climate services, may serve as a possible adaptation strategy to changing climate conditions. The present paper analyzes the value of climate services aimed at improving agricultural productivity through a reduction in...

This study investigates the dynamics of between-group and within-group wage inequality in a model with heterogeneous learning abilities putting a key emphasis on the shape of the ability distribution. In our model, intergenerational human capital externalities incentivize individuals to invest...

The paper develops the concept of "Economic Pathways" (EPs), which characterize theory-based scenarios for an economy that strives to achieve decarbonization by mid-century. The theoretical framework derives closed-from analytical solutions for consumption, innovation, emissions, and population....

We determine optimal climate policy using a dynamic climate model that accounts for the damages to capital and human health from burning fossil fuels. Our theoretical macroeconomic approach incorporates a separate health sector into an integrated climate-economy framework and provides...