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dc.creatorHambel, Christoph
dc.creatorKraft, Holger
dc.creatorSchwartz, Eduardo S.
dc.date.accessioned2021-09-28T09:23:22Z
dc.date.available2021-09-28T09:23:22Z
dc.date.issued2018-09-24
dc.identifier.urihttps://fif.hebis.de/xmlui/handle/123456789/2193
dc.description.abstractThis paper studies a dynamic stochastic general equilibrium model involving climate change. Our framework allows for feedback effects on the temperature dynamics. We are able to match estimates of future temperature distributions provided in the fifth assessment report of the IPCC (2014). We compare two approaches to capture damaging effects of temperature on output (level vs. growth rate impact) and combine them with two degrees of severity of this damage (Nordhaus vs. Weitzman calibration). It turns out that the choice of the damage function is crucial to answer the question of how much the distinction between level and growth rate impact matters. The social cost of carbon is similar for frameworks with level or growth rate impact if the potential damages of global warming are moderate. On the other hand, they are more than twice as large for a growth rate impact if damages are presumably severe. We also study the effect of varying risk aversion and elasticity of intertemporal substitution on our results. If damages are moderate for high temperatures, risk aversion only matters when climate change has a level impact on output, but the effects are relatively small. By contrast, the elasticity of intertemporal substitution has a significant effect for both level and growth rate impact. If damages are potentially severe for high temperatures, then the results also become sensitive to risk aversion for both damage specifications.
dc.rightsAttribution-ShareAlike 4.0 International
dc.rights.urihttp://creativecommons.org/licenses/by-sa/4.0/
dc.subjectSystemic Risk Lab
dc.subjectMacro Finance
dc.titleOptimal Carbon Abatement in a Stochastic Equilibrium Model with Climate Change
dc.typeWorking Paper
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1440?IPCC
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1458?Met Office
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1372?CMIP5
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1435?IMF
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1457?McKinsey
dc.source.filename92_SSRN-id2579694
dc.identifier.safeno92
dc.subject.keywordsclimate change economics
dc.subject.keywordscarbon abatement
dc.subject.keywordssocial cost of carbon
dc.subject.keywordsgdp growth
dc.subject.keywordsstochastic differential utility
dc.subject.jelD81
dc.subject.jelQ5
dc.subject.jelQ54
dc.subject.topic1yaron
dc.subject.topic1associate
dc.subject.topic1retirement
dc.subject.topic2basic
dc.subject.topic2proof
dc.subject.topic2formulate
dc.subject.topic3keyword
dc.subject.topic3quantity
dc.subject.topic3assumption
dc.subject.topic1nameMonetary Policy
dc.subject.topic2nameConsumption
dc.subject.topic3nameMacro Finance
dc.identifier.doi10.2139/ssrn.2579694


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