Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/165943
Authors: 
Asheim, Geir B.
Nesje, Frikk
Year of Publication: 
2015
Series/Report no.: 
Memorandum, Department of Economics, University of Oslo 22/2015
Abstract: 
Are the probable future negative effects of climate change an argument for decreasing the discount rate to promote the interests of future generations? The analysis of the present paper suggests that such stronger intergenerational altruism might undermine future wellbeing if not complemented by collective climate action. In the standard one-sector model of economic growth normatively attractive outcomes will be implemented if each generation has sufficient altruism for its descendants. This conclusion is radically changed in a two-sector model where one form of capital is more productive than the other, but leads to negative atmospheric externalities. In fact, the model shows that, if each dynasty is trying to get ahead in a world threatened by climate change by increasing its intergenerational altruism, then long-term wellbeing will be seriously undermined.
Subjects: 
intergenerational altruism
climate change
JEL: 
D63
D64
D71
Q01
Q54
Document Type: 
Working Paper

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