The belief that stringent climate policies are very costly is widespread among political decision-makers and the public. The Trump administration stressed the cost argument as the motivation for the US withdrawal from the Paris Climate Agreement. However, such judgements ignore the economic...

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....

Effective climate policy can be achieved by implementing either a global uniform carbon price or a global cap and trade system. But depending on the allocation of tax revenues and initial pollution permits, the instruments have very different wealth implications for the individual countries. The...

Climate physics predicts that the intensity of natural disasters will increase in the future due to climate change. We present a stochastic model of a growing economy where natural disasters are multiple and random, with damages driven by the economy's polluting activity. We provide a...

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...