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Discounting in the presence of catastrophic risk is a hotly debated issue, in particular with respect to climate change. Many scientists and laymen concerned with potentially catastrophic impacts feel that if an increase in the discount rate drastically increases the likelihood of catastrophic...
Persistent link: https://www.econbiz.de/10005424107
Persistent link: https://www.econbiz.de/10010916628
The paper combines analytic and numeric tools to investigate a nonlinear optimal control problem relevant to the economics of climate change. The problem describes optimal investments into pollution mitigation and environmental adaptation at a macroeconomic level. The steady-state analysis of...
Persistent link: https://www.econbiz.de/10010927707
The purpose of this paper is to derive necessary conditions for the optimal control in the presence of threshold effects when the threshold is a curve in n-dimensional space of uncertain location. The usefulness of these conditions is shown by examining the optimal regulation of two greenhouse...
Persistent link: https://www.econbiz.de/10005738450
The purpose of this paper is to derive necessary conditions for the optimal control in the presence of threshold effects when the threshold is a curve in n-dimensional space of uncertain location. The usefulness of these conditions is shown by examining the optimal regulation of two greenhouse...
Persistent link: https://www.econbiz.de/10010720812
of smooth ambiguity aversion to a more general notion of aversion to the subjectivity of belief. As a special case, the … framework permits a threefold disentanglement of intertemporal substitutability, Arrow-Pratt risk aversion, and smooth ambiguity …
Persistent link: https://www.econbiz.de/10011130823
paper, we apply static and dynamic versions of a smooth ambiguity model to climate mitigation policy. We obtain a general … result on the comparative statics of optimal abatement and ambiguity aversion, and then extend our analysis to a more … realistic, dynamic setting, where we introduce scientific ambiguity into the well-known DICE model of the climate-economy system …
Persistent link: https://www.econbiz.de/10010862767
. Second, the paper introduces aversion to non-risk uncertainty (ambiguity). I show a close formal similarity between the model … smooth ambiguity aversion. I merge the models, achieving a threefold disentanglement between risk aversion, ambiguity …
Persistent link: https://www.econbiz.de/10010949491
This note considers the treatment of risk and uncertainty in the recently established social cost of carbon (SCC) for analysis of federal regulations in the United States. It argues that the analysis of the US Interagency Working Group on Social Cost of Carbon did not go far enough into the tail...
Persistent link: https://www.econbiz.de/10010954737
The risk of losses of income and productive means due to adverse weather can differ significantly among farmers sharing a productive landscape, and is of course hard to estimate, or even “guesstimate” empirically. Moreover, the costs associated with investments in reduced vulnerability to...
Persistent link: https://www.econbiz.de/10011043699