Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25983
Authors: 
Funke, Michael
Paetz, Michael
Year of Publication: 
2007
Series/Report no.: 
CESifo working paper 1938
Abstract: 
Model uncertainty is inherent in the design of optimal environmental policy. We investigate the consequences in a simple linear model, where the aim of the policymaker is to stabilize the carbon content of the atmosphere. We study how decision-makers' concerns about robustness alter policy using the Hansen and Sargent (2000, 2003, 2007) approach. The analysis shows that a policymaker, who fears model misspecification should react more aggressively to changes in the stock of atmospheric carbon and implement policies which deliver a greater reduction of emissions.
Subjects: 
robust control model uncertainty
environmental policy
JEL: 
C61
Q25
Q28
D81
Document Type: 
Working Paper

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