Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/201987 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7761
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper studies the investment based growth rate effects of climate change. The analysis is based on the Integrated Assessment Model DICE by Nordhaus (2008). I depart from the original model, in that endogenous investments into a knowledge stock drive economic growth. Due to a negative capital accumulation as well as savings effect on the knowledge stock, climate change has a negative impact on gross income that lasts into the long run. In order to be able to quantify the growth rate effects, I calibrate the endogenous growth model version of DICE towards its exogenous growth counterpart. I find that in the exogenous growth model version of DICE, compared to its endogenous growth equivalent, in the social optimum, gross income is over-estimated by 2.3 % in 2100 and by 6.8 % in 2150.
Subjects: 
endogenous economic growth and climate change
JEL: 
O44
Q54
Document Type: 
Working Paper
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