Economics and Climate Change: Integrated Assessment in a Multi-Region World
29 Pages Posted: 20 Jan 2012
There are 2 versions of this paper
Economics and Climate Change: Integrated Assessment in a Multi-Region World
Date Written: January 2012
Abstract
This paper develops a model that integrates the climate and the global economy - an integrated assessment model - with which different policy scenarios can be analyzed and compared. The model is a dynamic stochastic general-equilibrium setup with a continuum of regions. Thus, it is a full stochastic general-equilibrium version of RICE, Nordhaus's pioneering multi-region integrated assessment model. Like RICE, our model features traded fossil fuel but otherwise has no markets across regions - there is no insurance nor any intertemporal trade across them. The extreme form of market incompleteness is not fully realistic but arguably not a decent approximation of reality. Its major advantage is that, along with a set of reasonable assumptions on preferences, technology, and nature, it allows a closed-form model solution. We use the model to assess the welfare consequences of carbon taxes that differ across as well as within oil-consuming and - producing regions. We show that, surprisingly, only taxes on oil producers can improve the climate: taxes on oil consumers have no effect at all. The calibrated model suggests large differences in views on climate policy across regions.
Keywords: climate, dynamic, integrated assessment, regional, stochastic
JEL Classification: H23, O44, Q0
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Offshoring and Directed Technical Change
By Daron Acemoglu, Gino A. Gancia, ...
-
Offshoring and Directed Technical Change
By Daron Acemoglu, Gino A. Gancia, ...
-
The Environment and Directed Technical Change
By Daron Acemoglu, Philippe Aghion, ...
-
The Environment and Directed Technical Change
By Daron Acemoglu, Philippe Aghion, ...
-
The Environment and Directed Technical Change
By Daron Acemoglu, Philippe Aghion, ...
-
Offshoring and Directed Technical Change
By Daron Acemoglu, Gino A. Gancia, ...
-
Appropriate Technology and Growth
By Susanto Basu and David N. Weil
-
By Antonio Ciccone and Giovanni Peri