Global Demographic Change and Climate Policies

47 Pages Posted: 15 Sep 2017

See all articles by Reyer Gerlagh

Reyer Gerlagh

Tilburg University - Tilburg University School of Economics and Management

Richard Jaimes

Tilburg University - Department of Economics

Ali Motavasseli

Institute for Management and Planning Studies

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Date Written: August 28, 2017

Abstract

Between 1950 and 2017, world average life expectancy increased from below-50 to above-70, while the fertility rate dropped from 5 to about 2.5. We develop and calibrate an analytic climate-economy model with overlapping generations to study the effect of such demographic change on capital markets and optimal climate policies. Our model replicates findings from the OLG-demography literature, such as a rise in households’ savings, and a declining rate of return to capital. We also find that demographic change raises the social cost of carbon, at 2020, from 28 euro/tCO2 in a model that abstracts from demography, to 94 euro/tCO2 in our calibrated model.

Keywords: climate change, social cost of carbon, environmental policy, demographic trends

JEL Classification: H230, J110, Q540, Q580

Suggested Citation

Gerlagh, Reyer and Jaimes, Richard and Motavasseli, Ali, Global Demographic Change and Climate Policies (August 28, 2017). CESifo Working Paper Series No. 6617. Available at SSRN: https://ssrn.com/abstract=3036318

Reyer Gerlagh (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Richard Jaimes

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Ali Motavasseli

Institute for Management and Planning Studies ( email )

North Niavaran Street
Tehran
Iran

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