Trading off generations: Equity, discounting, and climate change

Maik Schneider, Christian Traeger and Ralph Winkler

European Economic Review, 2012, vol. 56, issue 8, 1621-1644

Abstract: The prevailing literature discusses intergenerational trade-offs in climate change predominantly in terms of the Ramsey equation relying on the infinitely lived agent model. We discuss these trade-offs in a continuous time OLG framework and relate our results to the infinitely lived agent setting. We identify three shortcomings of the latter: first, underlying normative assumptions about social preferences cannot be deduced unambiguously. Second, the distribution among generations living at the same time cannot be captured. Third, the optimal solution may not be implementable in overlapping generations market economies.

Keywords: Climate change; Discounting; Infinitely lived agents; Intergenerational equity; Overlapping generations; Time preference (search for similar items in EconPapers)
JEL-codes: D63 H23 Q54 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:56:y:2012:i:8:p:1621-1644

DOI: 10.1016/j.euroecorev.2012.08.006

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