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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/10419/39059
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| Title: | | Global warming and extreme events: Rethinking the timing and intensity of environmental policy  |
| Authors: | | Chen, Yu-Fu Funke, Michael |
| Issue Date: | | 2010 |
| Series/Report no.: | | CESifo working paper Resources and Environment 3139 |
| Abstract: | | The possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real options model with 'tail risk'. In a nutshell, our results indicate the importance of tail risk and call for foresighted pre-emptive climate policies. |
| Subjects: | | climate policy extreme events real options Levy process |
| JEL: | | D81 Q54 Q58 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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