The risk-adjusted carbon price
A popular model of economy and climate change has logarithmic preferences and damages proportional to the carbon stock in which case the certainty-equivalent carbon price is optimal. We allow for different aversions to risk and intertemporal fluctuations, convex damages, uncertainties in economic gr...
| প্রধান লেখক: | , |
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| বিন্যাস: | Working paper |
| প্রকাশিত: |
University of Oxford
2018
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| _version_ | 1826258431210684416 |
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| author | Van der Ploeg, R van den Bremer, T |
| author_facet | Van der Ploeg, R van den Bremer, T |
| author_sort | Van der Ploeg, R |
| collection | OXFORD |
| description | A popular model of economy and climate change has logarithmic preferences and damages proportional to the carbon stock in which case the certainty-equivalent carbon price is optimal. We allow for different aversions to risk and intertemporal fluctuations, convex damages, uncertainties in economic growth, atmospheric carbon, climate sensitivity and damages, correlated risks, and distributions that are skewed in the longer run to capture climate feedbacks. We derive a non-certainty-equivalent rule for the carbon price, which incorporates precautionary, risk-insurance and risk-exposure, and climate beta effects to deal with future economic and climatic risks. We interpret these effects with a calibrated DSGE model. |
| first_indexed | 2024-03-06T18:33:53Z |
| format | Working paper |
| id | oxford-uuid:0a95042e-dedd-49e9-96aa-7ca0e341fa81 |
| institution | University of Oxford |
| last_indexed | 2024-03-06T18:33:53Z |
| publishDate | 2018 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:0a95042e-dedd-49e9-96aa-7ca0e341fa812022-03-26T09:24:42ZThe risk-adjusted carbon priceWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:0a95042e-dedd-49e9-96aa-7ca0e341fa81Bulk import via SwordSymplectic ElementsUniversity of Oxford2018Van der Ploeg, Rvan den Bremer, TA popular model of economy and climate change has logarithmic preferences and damages proportional to the carbon stock in which case the certainty-equivalent carbon price is optimal. We allow for different aversions to risk and intertemporal fluctuations, convex damages, uncertainties in economic growth, atmospheric carbon, climate sensitivity and damages, correlated risks, and distributions that are skewed in the longer run to capture climate feedbacks. We derive a non-certainty-equivalent rule for the carbon price, which incorporates precautionary, risk-insurance and risk-exposure, and climate beta effects to deal with future economic and climatic risks. We interpret these effects with a calibrated DSGE model. |
| spellingShingle | Van der Ploeg, R van den Bremer, T The risk-adjusted carbon price |
| title | The risk-adjusted carbon price |
| title_full | The risk-adjusted carbon price |
| title_fullStr | The risk-adjusted carbon price |
| title_full_unstemmed | The risk-adjusted carbon price |
| title_short | The risk-adjusted carbon price |
| title_sort | risk adjusted carbon price |
| work_keys_str_mv | AT vanderploegr theriskadjustedcarbonprice AT vandenbremert theriskadjustedcarbonprice AT vanderploegr riskadjustedcarbonprice AT vandenbremert riskadjustedcarbonprice |