Democratic Climate Policies with Overlapping Generations

Arnaud Goussebaïle ()
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Arnaud Goussebaïle: CER-ETH – Center of Economic Research at ETH Zurich, Zuerichbergstrasse 18 8092 Zurich, Switzerland
Authors registered in the RePEc Author Service: Arnaud Goussebaïle

No 22/374, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: An extensive climate policy literature provides various recommendations, but they are not supported democratically since the models employed consider either infinitely-lived individuals or normative social objectives (or both). In contrast, the present paper provides policy recommendations that are able to go through democratic processes. I develop an overlapping generation model with political process micro-foundations. I analyze how democratic policies, which are directly and indirectly related to climate change, differ from standard recommended policies. The novel politico-economic formula derived for the interest rate highlights that individual pure time preference, individual altruism toward descendants, and young generation political power are key determinants of democratic climate policy ambition.

Keywords: Climate change; Discounting; Externality; Overlapping generations; Political economy (search for similar items in EconPapers)
JEL-codes: D6 D7 E6 Q5 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2022-08
New Economics Papers: this item is included in nep-dge, nep-ene, nep-env and nep-pol
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