Asset Pricing Implications of Macroeconomic Interventions: An Application to Climate Policy

27 Pages Posted: 28 Jun 2013

See all articles by Rajnish Mehra

Rajnish Mehra

Arizona State University (ASU) - W.P Carey School of Business, Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 26, 2013

Abstract

This paper illustrates that evaluating alternate abatement polices that affect the growth path of an economy on the basis of their effects on asset valuation may not be welfare enhancing. We show that the class of abatement polices considered in the integrated assessment literature are robust with respect to the choice of a discount factor if lifetime consumption equivalents are used as a metric. We argue against a global welfare function in the presence of significant global household heterogeneity. While economic analysis is a useful tool for evaluating different policies for a homogenous class of households, inter household comparisons are an ethical issue.

Keywords: Asset Pricing, Climate Policy, Macroeconomic Interventions

JEL Classification: E44, E6, G00, G12, G31, H00, O1, Q54

Suggested Citation

Mehra, Rajnish, Asset Pricing Implications of Macroeconomic Interventions: An Application to Climate Policy (June 26, 2013). Available at SSRN: https://ssrn.com/abstract=2285530 or http://dx.doi.org/10.2139/ssrn.2285530

Rajnish Mehra (Contact Author)

Arizona State University (ASU) - W.P Carey School of Business, Department of Economics ( email )

Tempe, AZ 85287-3806
United States
480 965 6335 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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