The macroeconomics of climate change: Starting points, tentative results, and a way forward

John Hassler, Per Krusell and Conny Olovsson
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John Hassler: Stockholm University
Per Krusell: Stockholm University

No WP24-8, Working Paper Series from Peterson Institute for International Economics

Abstract: This paper provides scientific starting points for climate-economy modeling. The sensitivity of climate change to emissions of greenhouse gases is uncertain. The same is true about the long-run economic consequences of climate change. Therefore, the authors argue that traditional cost-benefit analyses including calculations of optimal carbon taxes are, and will remain, unconvincing. Climate-economic models are nevertheless useful for finding effective climate policies that are robust to different assumptions about these uncertainties. This paper outlines such a model. A key result is that a transition to climate neutrality can be implemented at an acceptably low cost. The authors discuss the policies required for this transition, compare climate policies in the European Union and the United States, and provide suggestions for future research.

Keywords: Climate-economic modeling; climate change; climate neutrality; emissions; climate transition (search for similar items in EconPapers)
JEL-codes: E1 Q54 (search for similar items in EconPapers)
Date: 2024-04
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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Citations: View citations in EconPapers (1)

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