Asset Prices and Climate Policy

Larry Karp and Armon Rezai

No 595, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: People might reduce carbon emissions to protect themselves, their wealth, or future generations from climate damage. An overlapping generations climate model with endogenous asset price and investment levels disentangles these incentives. Asset markets capitalize the future effects of policy, regardless of people’s concern for future generations. These markets can lead self-interested agents to undertake significant abatement. A small climate policy that raises the price of capital increases old agents’ welfare and also increases welfare of young agents with a high intertemporal elasticity of substitution. Climate policy can also have subtle distributional effects across the currently living generations.

Date: 2018
New Economics Papers: this item is included in nep-dge, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2018/paper_595.pdf (application/pdf)

Related works:
Working Paper: Asset prices and climate policy (2017)
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:red:sed018:595

Access Statistics for this paper

More papers in 2018 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().