A Global Equilibrium Model of Economy-Climate Interactions

Per Krusell

No 1186, 2009 Meeting Papers from Society for Economic Dynamics

Abstract: This paper constructs a dynamic general-equilibrium model of the world economy and the global climate system. The goal of the paper is to characterize quantitatively the transition of the world economy, including welfare assessments, to a steady state with zero emissions of carbon. There is a continuum of regions corresponding to locations around the globe. Each region operates a production technology that uses physical capital and carbon energy. Global carbon burning affects the climate, which induces region-specific production damages. Financial-markets incompleteness limits insurance against idiosyncratic productivity and climate shocks. Permanent geophysical regional differences influence regional production, consumption, and welfare outcomes.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed009:1186

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