Climate change is an externality since those who emit greenhouse gases do not pay the long-term negative consequences of their emissions. In view of the resulting inefficiency, it has been claimed that climate policies can be evaluated by the Pareto principle. However, climate policies lead to...

We study the role of alternative intertemporal preference representations in a model of economic growth, stock pollutant and endogenous risk of catastrophic collapse. We contrast the traditional “discounted utility” model, which assumes risk neutrality with respect to intertemporal utility,...

Climate change is often seen as an issue of intertemporal consumption trade-off: consume all you want today and face future climate damages, or sacrifice consumption today to implement costly climate policies and avoid future climate damages. When assuming enduring technological progress, a...