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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/10419/49475
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| Title: | | Dark clouds or silver linings? Knightian uncertainty and climate change  |
| Authors: | | Chen, Yu-fu Funke, Michael Glanemann, Nicole |
| Issue Date: | | 2011 |
| Series/Report no.: | | CESifo working paper: Resource and Environment Economics 3516 |
| Abstract: | | This paper examines the impact of Knightian uncertainty upon optimal climate policy through the prism of a continuous-time real option modelling framework. We analytically determine optimal intertemporal climate policies under ambiguity. Additionally, numerical simulations are provided to illustrate the properties of the model. The results indicate that increasing Knightian uncertainty accelerates climate policy, i.e. policymakers become more reluctant to postpone the timing of climate policies into the future. |
| Subjects: | | climate change Knightian uncertainty ê ambiguity real options |
| JEL: | | C61 D81 Q54 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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