Carbon Prices for the Next Hundred Years

Arbeitspapier

World income grows fast without verifiable climate-change impacts on the economy. The growth spell can end if climate impacts turn real but this can take decades to learn. We develop a tractable stochastic climate-economy model with a hidden-state impact process to evaluate the contributions of the expanding economy and changing impact beliefs to the social cost of carbon. Taking a dataset of estimates for the social cost as a representation of beliefs, we assess how robust climate policies are to the delays of hard information. The carbon price should rise with income to the next century, even without observed impacts. The carbon price should grow faster than the economy as long as climate warming is not enough for generating impacts that are informative about the true social cost.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4671

Classification and Topics

• Classification: Wirtschaft ; Project Evaluation; Social Discount Rate ; Public Goods ; Allocative Efficiency; Cost-Benefit Analysis ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Climate; Natural Disasters and Their Management; Global Warming ; Macroeconomics: Consumption; Saving; Wealth
• Subject: carbon price ; learning ; climate change

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gerlagh, Reyer ; Liski, Matti
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/93437
• Last update: 10.03.2025, 11:45 AM CET