Market Exchange Rates or Purchasing Power Parity: Does the Choice Make a Difference to the Climate Debate?

14 Pages Posted: 2 Oct 2003

See all articles by Alan S. Manne

Alan S. Manne

Stanford University - Department of Mechanical Engineering

Richard G. Richels

Electric Power Research Institute, U.S.A.

Date Written: September 2003

Abstract

Critics of the Intergovernmental Panel on Climate Change's Special Report on Emission Scenarios claim that the use of market exchange rates rather than purchasing power parity has led to a significant upward bias in projections of greenhouse gas emissions, and hence unrealistically high future temperature. Rather than revisit the debate on the choice of exchange rates, we address a much simpler question: does the choice make a difference when it comes to projecting future temperature change? Employing a computable general equilibrium model designed to examine a variety of issues in the climate debate, we find that the answer is yes, but the difference is only minor.

Keywords: exchange, rates, purchasing, greenhouse, emissions, equilibrium

JEL Classification: N5

Suggested Citation

Manne, Alan S. and Richels, Richard, Market Exchange Rates or Purchasing Power Parity: Does the Choice Make a Difference to the Climate Debate? (September 2003). AEI-Brookings Joint Center Working Paper No. 03-11. Available at SSRN: https://ssrn.com/abstract=449265 or http://dx.doi.org/10.2139/ssrn.449265

Alan S. Manne

Stanford University - Department of Mechanical Engineering ( email )

Stanford, CA 94305
United States

Richard Richels (Contact Author)

Electric Power Research Institute, U.S.A. ( email )

3412 Hillview Avenue
P.O. Box 10412
Palo Alto, CA 94304-1395
United States
415-855-2602 (Phone)
415-855-1080 (Fax)

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