Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130416
Authors: 
van der Ploeg, Frederick
Rezai, Armon
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5787
Abstract: 
The tractable general equilibrium model developed by Golosov et al. (2014), GHKT for short, is modified to allow for stock-dependent fossil fuel extraction costs and partial exhaustion of fossil fuel reserves, a negative impact of global warming on growth, mean reversion in climate damages, steady labour-augmenting technical progress, specific green technical progress driven by learning by doing, population growth, and a direct effect of the stock of atmospheric carbon on instantaneous welfare. We characterize the social optimum and derive simple rule for both the optimal carbon tax and the renewable energy subsidy, and characterize the optimal amount of untapped fossil fuel.
Subjects: 
social cost of carbon
carbon tax
renewable energy subsidy
general equilibrium
Ramsey growth
capital accumulation
stranded assets
simple rules
JEL: 
H21
Q51
Q54
Document Type: 
Working Paper

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