 Temperature Shocks and Climate Change: A Conceptual AnalysisChristian P. Traeger and Christian Träger () No 12353, CESifo Working Paper Series from CESifo Abstract: This paper addresses the challenge of accurately modeling and estimating climate change damages. Time series approaches rely on weather shocks, while cross-sectional analyses capture climatic differences but suffer from omitted variable bias. Climate is defined as the statistical pattern of weather that persists over time and allows for adaptation, unlike unpredictable weather realizations. To assess econometric approaches, I (i) integrate forward-looking adaptation into a full-fledged integrated assessment model of climate change permitting an analytic solution and (ii) generalize the insights based on a dynamic stochastic envelope argument. I show how a carefully designed time series (or panel) estimation strategy can comprehensively identify the costs of climate change, including the indirect identification of unobserved adaptation costs. The paper also presents the first explicit formula for This result is not only insightful in its own right but also valuable for clarifying and refining prevailing envelope-theorem arguments in the literature and for emphasizing that adaptation costs are part of the social cost of carbon. Keywords: adaptation; climate change; climate econometrics; damages; integrated assess- ment; social cost of carbon; uncertainty; identification (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12353 Access Statistics for this paper More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.