Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/88665 
Year of Publication: 
2009
Series/Report no.: 
Research Papers in Economics No. 2/09
Publisher: 
Universität Trier, Fachbereich IV – Volkswirtschaftslehre, Trier
Abstract: 
We investigate the economic impact of stochastic endogenous extreme events and insurance in a growth model. Our analytical results and computational experiments show that i) transparency of the insurance sector is the decisive requisite for abatement activities, implying substantial policy opportunities; ii) we can fully characterize and quantify the impact of uncertainty on the social planner's decisions; iii) a decentralized economy will under-invest in abatement without adequate policy interventions; iv) precautionary beliefs on the frequency of extreme events lead to more sustainability; v) technical change does not change the ordering of the paths but leads to a more sustainable future; v) a social security system which prices insurance fairly is preferable to an insurance industry which provides insurance with an overhead.
Subjects: 
economic growth
climate change
insurance
integrated assessment
extreme events
catastrophes
JEL: 
Q5
O1
Document Type: 
Working Paper

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