Asset Pricing Implications of Macroeconomic Interventions An Application to Climate Policy

Rajnish Mehra

No 19146, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper illustrates that evaluating alternate abatement polices that affect the growth path of an economy on the basis of their effects on asset valuation may not be welfare enhancing. We show that the class of abatement polices considered in the integrated assessment literature are robust with respect to the choice of a discount factor if lifetime consumption equivalents are used as a metric. We argue against a global welfare function in the presence of significant global household heterogeneity. While economic analysis is a useful tool for evaluating different policies for a homogenous class of households, inter household comparisons are an ethical issue.

JEL-codes: E44 E6 G00 G12 G31 H00 O1 Q54 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-ene, nep-env and nep-mac
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