GLOBAL WARMING AND FAT TAILED-UNCERTAINTY: RETHINKING THE TIMING AND INTENSITY OF CLIMATE POLICY

Yu-Fu Chen and Michael Funke

No 267, Dundee Discussion Papers in Economics from Economic Studies, University of Dundee

Abstract: The possibility of low-probability extreme natural events has reignited the debate over the optimal intensity and timing of climate policy. In this paper, we contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real options model with “tail risk”. In a nutshell, our results indicate the importance of tail risk and call for foresighted pre-emptive climate policies.

Keywords: Climate Policy; Extreme Events; Real Options; Levy process (search for similar items in EconPapers)
JEL-codes: D81 Q54 Q58 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2012-06
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.dundee.ac.uk/media/dundeewebsite/econom ... cussion/DDPE_267.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.dundee.ac.uk/media/dundeewebsite/economicstudies/documents/discussion/DDPE_267.pdf [301 Moved Permanently]--> https://www.dundee.ac.uk/media/dundeewebsite/economicstudies/documents/discussion/DDPE_267.pdf)

Related works:
Working Paper: Global Warming and Fat Tailed-uncertainty: Rethinking the Timing and Intensity of Climate Policy (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dun:dpaper:267

Access Statistics for this paper

More papers in Dundee Discussion Papers in Economics from Economic Studies, University of Dundee Contact information at EDIRC.
Bibliographic data for series maintained by Andrzej Kwiatkowski ().