American Economic Journal: Economic Policy
no. 3, August 2023
I study optimal carbon taxation in an analytic quantitative integrated assessment model (IAM) that links IAM components, parametric assumptions, and calibration approaches directly to their policy impacts. I show how temperature's tax impact differs from that of previously analytically modeled carbon dynamics. Novel to analytic IAMs are a general economy, energy sectors including capital, varying degrees of substitutability across energy sources, an approximation of capital persistence, objective functions that include CES preferences and population weighting, and an explicit model of the greenhouse effect and ocean-atmosphere temperature dynamics. The paper enables economists to develop better-informed opinions about the social cost of carbon.
Traeger, Christian P.
"ACE—Analytic Climate Economy."
American Economic Journal: Economic Policy,
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Project Evaluation; Social Discount Rate
Climate; Natural Disasters and Their Management; Global Warming
Environmental Economics: Government Policy