Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/113794
Authors: 
Traeger, Christian
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5464
Abstract: 
The paper derives the optimal carbon tax in closed-form from an integrated assessment of climate change. The formula shows how carbon, temperature, and economic dynamics quantify the optimal mitigation effort. The model’s descriptive power is comparable to numeric models used in policy advising. Uncertainty surrounding climate change remains large. The closed-form expressions of welfare loss from shocks and epistemological uncertainty identify the interaction of (intertemporal) risk attitude, distributional moments, and the climatic shadow values. Welfare gains from reducing uncertainty about temperature feedbacks are much higher than the gains from better measurements of carbon flows.
Subjects: 
climate change
integrated assessment
uncertainty
learning
risk aversion
recursive utility
social cost of carbon
carbon tax
JEL: 
Q54
H43
E13
D81
D90
D61
Document Type: 
Working Paper

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