Climate policy

John Hassler, Per Krusell and Jonas Nycander

Economic Policy, 2016, vol. 31, issue 87, 503-558

Abstract: This paper makes suggestions for climate policy and defends them based on recent research in economics and the natural sciences. In summary: (i) the optimal carbon tax is rather modest; (ii) the key climate threat is coal; (iii) a carbon tax is to be preferred over a quantity-based system; (iv) the optimal tax on carbon does not appreciably harm growth; (v) subsidies to green technology are beneficial for the climate only to the extent that they make green technology outcompete coal; and (vi) a carbon tax is politically feasible.

Date: 2016
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