Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24153
Authors: 
Böhringer, Christoph
Löschel, Andreas
Rutherford, Thomas F.
Year of Publication: 
2005
Series/Report no.: 
ZEW Discussion Papers 05-07
Abstract: 
We present a decomposition approach for integrated assessment modeling of climate policy based on a linear approximation of the climate system. Our objective is to demonstrate the usefulness of decomposition for integrated assessment models posed in a complementarity format. First, the complementarity formulation cum decomposition permits a precise representation of post-terminal damages thereby substantially reducing the model horizon required to produce an accurate approximation of the infinite-horizon equilibrium. Second, and central to the economic assessment of climate policies, the complementarity approach provides a means of incorporating second-best effects that are not easily represented in an optimization model.
Subjects: 
integrated assessment
decomposition
terminal constraints
optimal taxation
JEL: 
D61
D58
C63
C61
Document Type: 
Working Paper

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