Climate Change through the Lens of Macroeconomic Modeling

Fernández-Villaverde, Jesús, Kenneth Gillingham and Simon Scheidegger

No 19468, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: There is a rapidly advancing literature on the macroeconomics of climate change. This review focuses on developments in the construction and solution of structural integrated assessment models (IAMs), highlighting the marriage of state-of-the-art natural science with general equilibrium theory. We discuss challenges in solving dynamic stochastic IAMs with sharp nonlinearities, multiple regions, and multiple sources of risk. Key innovations in deep learning and other machine learning approaches overcome many computational challenges and enhance the accuracy and relevance of policy findings. We conclude with an overview of recent applications of IAMs and key policy insights.

Keywords: Climate; change (search for similar items in EconPapers)
JEL-codes: C61 E27 Q5 Q51 Q54 Q58 (search for similar items in EconPapers)
Date: 2024-09
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