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dc.contributor.authorLi, Xin
Narajabad, Borghan
Temzelides, Ted
dc.date.accessioned 2017-05-19T20:48:13Z
dc.date.available 2017-05-19T20:48:13Z
dc.date.issued 2016
dc.identifier.citation Li, Xin, Narajabad, Borghan and Temzelides, Ted. "Robust dynamic energy use and climate change." Quantitative Economics, 7, no. 3 (2016) Wiley: 821-857. https://doi.org/10.3982/QE463.
dc.identifier.urihttps://hdl.handle.net/1911/94308
dc.description.abstract We 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.
dc.language.iso eng
dc.publisher Wiley
dc.rights Licensed under the Creative Commons Attribution-NonCommercial License 3.0
dc.rights.urihttps://creativecommons.org/licenses/by-nc/3.0/us/
dc.title Robust dynamic energy use and climate change
dc.type Journal article
dc.citation.journalTitle Quantitative Economics
dc.contributor.org James A. Baker III Institute for Public Policy
dc.citation.volumeNumber 7
dc.citation.issueNumber 3
dc.type.dcmi Text
dc.identifier.doihttps://doi.org/10.3982/QE463
dc.type.publication publisher version
dc.citation.firstpage 821
dc.citation.lastpage 857


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Licensed under the Creative Commons Attribution-NonCommercial License 3.0
Except where otherwise noted, this item's license is described as Licensed under the Creative Commons Attribution-NonCommercial License 3.0