Robust dynamic energy use and climate change

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dc.citation.firstpage821en_US
dc.citation.issueNumber3en_US
dc.citation.journalTitleQuantitative Economicsen_US
dc.citation.lastpage857en_US
dc.citation.volumeNumber7en_US
dc.contributor.authorLi, Xinen_US
dc.contributor.authorNarajabad, Borghanen_US
dc.contributor.authorTemzelides, Teden_US
dc.contributor.orgJames A. Baker III Institute for Public Policyen_US
dc.date.accessioned2017-05-19T20:48:13Zen_US
dc.date.available2017-05-19T20:48:13Zen_US
dc.date.issued2016en_US
dc.description.abstractWe study a dynamic stochastic general equilibrium model in which agents are concerned about model uncertainty regarding climate change. An externality from greenhouse gas emissions damages the economy's capital stock. We assume that the mapping from climate change to damages is subject to uncertainty, as opposed to risk, and we use robust control to study efficiency and optimal policy. We obtain a sharp analytical solution for the implied environmental externality and characterize dynamic optimal taxation. The optimal tax that restores the socially optimal allocation is Pigouvian. We study optimal output growth in the presence and in the absence of concerns about model uncertainty, and find that these can lead to substantially different conclusions regarding the optimal emissions and the optimal mix of fossil fuel. In particular, the optimal use of coal will be significantly lower on a robust path, while the optimal use of oil/gas will edge down.en_US
dc.identifier.citationLi, Xin, Narajabad, Borghan and Temzelides, Ted. "Robust dynamic energy use and climate change." <i>Quantitative Economics,</i> 7, no. 3 (2016) Wiley: 821-857. https://doi.org/10.3982/QE463.en_US
dc.identifier.doihttps://doi.org/10.3982/QE463en_US
dc.identifier.urihttps://hdl.handle.net/1911/94308en_US
dc.language.isoengen_US
dc.publisherWileyen_US
dc.rightsLicensed under the Creative Commons Attribution-NonCommercial License 3.0en_US
dc.rights.urihttps://creativecommons.org/licenses/by-nc/3.0/us/en_US
dc.titleRobust dynamic energy use and climate changeen_US
dc.typeJournal articleen_US
dc.type.dcmiTexten_US
dc.type.publicationpublisher versionen_US
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