Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/53171
Authors: 
Golub, Alexander
Narita, Daiju
Schmidt, Matthias G. W.
Year of Publication: 
2011
Series/Report no.: 
Nota di lavoro // Fondazione Eni Enrico Mattei: Sustainable development 02.2011
Abstract: 
Uncertainty plays a key role in the economics of climate change, and the discussions surrounding its implications for climate policy are far from settled. We give an overview of the literature on uncertainty in integrated assessment models of climate change and identify some future research needs. In the paper, we pay particular attention to three different and complementary approaches that model uncertainty in association with integrated assessment models: the discrete uncertainty modeling, the most common way to incorporate uncertainty in complex climate-economy models: the real options analysis, a simplified way to identify and value flexibility: the continuous-time stochastic dynamic programming, which is computationally most challenging but necessary if persistent stochasticity is considered.
Subjects: 
Uncertainty
Learning
Economics of Climate Change
Integrated Assessment Models
Real Options
JEL: 
D81
Q54
C61
Document Type: 
Working Paper

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