The Social Cost of Carbon and the Ramsey Rule
In: CESifo Working Paper No. 7359
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In: CESifo Working Paper No. 7359
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In: NBER Working Paper No. w22246
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In: Working paper series 2005,05
In: Environmental and resource economics, Band 82, Heft 2, S. 461-481
ISSN: 1573-1502
AbstractThe objective of this paper is to assess the use of simple rules for the social cost of carbon. It is shown that several interrelated objections may apply. The main issues are the following. First, the underlying theoretical models typically assume that the economy finds itself on a balanced growth path, implying that addressing the issue of designing policies for the short run, which play a role in the actual policy debate, are neglected. Second, for some cases the assumptions made regarding the marginal damages of high temperature or of arge atmospheric$$CO_{2}$$CO2stocks are shown to be incompatible with other assumptions made. Third, typically the rules follow from an optimal growth model and associate the social cost for a particular year with GDP for that year, but it is not always acknowledged that it should be optimal rather than actual GDP for that year. I also go into the performance of simple rules as compared to first-best.
In: Economics Discussion Paper No. 2011-35
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Working paper
In: Canadian public policy: Analyse de politiques, Band 39, Heft Supplement 2, S. S67-S79
ISSN: 1911-9917
The Social Cost of Carbon (SCC) is being adopted for systematic use in cost-benefit analysis (CBA) conducted by the Government of Canada. Although there are potential efficiency gains from its application, we argue that the SCC may be inappropriate for use in CBA for three reasons. First, as currently calculated, the SCC typically excludes the potential for catastrophes and certain types of climate damages, and assumes perfect substitutability between natural and human capital. For these reasons, it is likely to be biased downwards, and as such would provide misleading advice to policy-makers. Second, the SCC is a global measure of benefits, whereas standard practice in CBA is to include only domestic costs and benefits. Accounting for costs borne outside of Canada and along only one dimension (carbon damage) risks reducing economic efficiency and confusing the users of CBA studies. Third, SCC-based decision-making is unlikely to be consistent with Canadian commitments to international partners on emissions reductions; so its adoption risks institutionalizing non-delivery of those commitments.
In: Oxford review of economic policy, Band 19, Heft 3, S. 362-384
ISSN: 1460-2121
In: Oxford review of economic policy, Band 19, Heft 3, S. 362-384
ISSN: 0266-903X
World Affairs Online
In: American economic review, Band 89, Heft 4, S. 994-1009
ISSN: 1944-7981
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In: University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-04
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In: Journal of international economics, Band 131, S. 103490
ISSN: 0022-1996
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In: FEEM Working Paper No. 83.2013
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