Environmental Policy Under Model Uncertainty: A Robust Optimal Control Approach

Michael Funke and Michael Paetz

No 1938, CESifo Working Paper Series from CESifo

Abstract: Model uncertainty is inherent in the design of optimal environmental policy. We investigate the consequences in a simple linear model, where the aim of the policymaker is to stabilize the carbon content of the atmosphere. We study how decision-makers' concerns about robustness alter policy using the Hansen and Sargent (2000, 2003, 2007) approach. The analysis shows that a policymaker, who fears model misspecification should react more aggressively to changes in the stock of atmospheric carbon and implement policies which deliver a greater reduction of emissions.

Keywords: robust control model uncertainty; environmental policy (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Environmental policy under model uncertainty: a robust optimal control approach (2011)
Working Paper: Environmental policy under model uncertainty: a robust optimal control approach (2011)
Working Paper: Environmental Policy Under Model Uncertainty: A Robust Optimal Control Approach (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1938

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