Decomposing Integrated Assessment Climate Change

Christoph Böhringer, Andreas Löschel and Thomas Rutherford ()

No 05-07, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We present a decomposition approach for integrated assessment modeling of climate policy based on a linear approximation of the climate system. Our objective is to demonstrate the usefulness of decomposition for integrated assessment models posed in a complementarity format. First, the complementarity formulation cum decomposition permits a precise representation of post-terminal damages thereby substantially reducing the model horizon required to produce an accurate approximation of the infinite-horizon equilibrium. Second, and central to the economic assessment of climate policies, the complementarity approach provides a means of incorporating second-best effects that are not easily represented in an optimization model.

Keywords: integrated assessment; decomposition; terminal constraints; optimal taxation (search for similar items in EconPapers)
JEL-codes: C61 C63 D58 D61 (search for similar items in EconPapers)
Date: 2005
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Related works:
Journal Article: Decomposing the integrated assessment of climate change (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:4540

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