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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/25983
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| Title: | | Environmental policy under model uncertainty: a robust optimal control approach  |
| Authors: | | Funke, Michael Paetz, Michael |
| Issue Date: | | 2007 |
| Series/Report no.: | | CESifo working paper 1938 |
| Abstract: | | Model uncertainty is inherent in the design of optimal environmental policy. We investigate the consequences in a simple linear model, where the aim of the policymaker is to stabilize the carbon content of the atmosphere. We study how decision-makers' concerns about robustness alter policy using the Hansen and Sargent (2000, 2003, 2007) approach. The analysis shows that a policymaker, who fears model misspecification should react more aggressively to changes in the stock of atmospheric carbon and implement policies which deliver a greater reduction of emissions. |
| Subjects: | | robust control model uncertainty environmental policy |
| JEL: | | C61 Q25 Q28 D81 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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