There is much discussion in the literature about the resources society should commit to ameliorate the effects of climate change. The optimal greenhouse gas abatement strategy has a direct relation to the social cost of carbon (SCC) which measures the externalities incurred in emitting one ton...

This paper studies a dynamic stochastic general equilibrium model involving climate change. Our model allows for damages on economic growth resulting from global warming. In the calibration, we capture effects from climate change and feedback effects on the temperature dynamics. We solve for the...

We develop a real options model of R&D valuation, which takes into account the uncertainty in the quality of the research output, the time and cost to completion, and the market demand for the R&D output. The model is then applied to study the problem of pharmaceutical under-investment in R&D...