The Social Cost of Carbon and the Ramsey Rule

Cees Withagen

No 2019.16, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: The objective of this paper is to critically assess the use of simple rules for the social cost of carbon (SCC) that employ a rudimentary form of the Ramsey Rule. Two interrelated caveats apply. First, if climate change poses a serious problem, it is hard to justify an exogenous constant growth rate of consumption and GDP, as is done in several contributions by prominent scholars. Second, to derive the optimal SCC one needs full knowledge of the entire future, in spite of the use of popular ways to try to get around this. Moreover, it is shown that some simple rules suffer from inconsistencies in their derivation.

Keywords: Social cost of carbon; Ramsey rule (search for similar items in EconPapers)
JEL-codes: Q30 Q54 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2019-09
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://faere.fr/pub/WorkingPapers/Withagen_FAERE_WP2019.16.pdf First version, 2019 (application/pdf)

Related works:
Working Paper: The Social Cost of Carbon and the Ramsey Rule (2018)
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:fae:wpaper:2019.16

Access Statistics for this paper

More papers in Working Papers from FAERE - French Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Dorothée Charlier ().