Climate change and economic analysis

Peter Skott

No PKWP2605, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: Macroeconomic models have been extended to incorporate climate change, to analyze its implications, and to examine the costs and benefits of green transitions. This paper discusses some limitations of these models and the critical dependence of their implications on factors that are subject to great uncertainty. Instead of trying to derive optimal trajectories of mitigation and macroeconomic policy, economics may be useful primarily in the analysis of the pervasive collective-action problems and distributional effects associated with a green transition and in the design of economic incentives to ensure a successful implementation of the transition. The analysis, moreover, must move beyond the 'brown'-'green' dichotomy and analyze different mitigation strategies, their scalability and their systemic effects.

Keywords: Integrated assessment models; Keynesian climate models; welfare criteria; damage functions; transition strategies; free-rider prob- lem; distributional conict (search for similar items in EconPapers)
JEL-codes: O44 Q43 Q54 (search for similar items in EconPapers)
Pages: 23
Date: 2026-02
New Economics Papers: this item is included in nep-ene, nep-env and nep-pke
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