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on Resource Economics |
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Issue of 2019‒05‒27
three papers chosen by |
| By: | Galina Besstremyannaya (CEFIR at New Economic School); Richard Dasher (Stanford University); Sergei Golovan (New Economic School) |
| Abstract: | A considerable amount of research has shown that that carbon tax combined with research subsidy may be regarded as an optimal policy in view of diffusing low carbon technologies for the benefit of the society. The paper exploits the macro economic approach of the endogenous growth models with technological change for a comparative assessment of these policy measures on the economic growth in the US and Japan in the medium and the long run. The results of our micro estimates reveal several important differences across the Japanese and US energy firms: lower elasticity of innovation production function in R&D expenditure, lower probability of a radical innovation, and larger advances of dirty technologies in Japan. This may explain our quantitative findings of stronger reliance on carbon tax than on research subsidies in Japan relative to the US. |
| Keywords: | endogenous growth, technological change, innovation, carbon tax, energy |
| JEL: | O11 O13 O47 Q43 Q49 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:abo:neswpt:w0245&r=all |
| By: | Stan Olijslagers (University of Amsterdam); Sweder van Wijnbergen (University of Amsterdam) |
| Abstract: | We focus on the effect of preference specifications on the current day valuation of future outcomes. Specifically, we analyze the effect of risk aversion, ambiguity aversion and the elasticity of intertemporal substitution on the willingness to pay to avoid climate change risk. The first part of the paper analyzes a general disaster (jump) risk model with a constant arrival rate of disasters. This provides useful intuition in how preferences influence valuation of long-term risk. The second part of the paper extends this model with a climate model and a temperature dependent arrival rate. Since the model yields closed form solutions up to solving an integral, our model does not suffer from the curse of dimensionality of numerical IAMs with several state variables. Introducing Epstein-Zin preferences with an elasticity of substitution higher than one and ambiguity aversion leads to much larger estimates of the social cost of carbon than obtained under power utility. The dominant parameters are the risk aversion coefficient and the elasticity of intertemporal substitution. Ambiguity aversion is of second order importance. |
| Keywords: | Social Cost of Carbon, Ambiguity Aversion, Epstein-Zin preferences, Stochastic Differential Utility, Climate Change |
| JEL: | Q51 Q54 G12 G13 |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20190030&r=all |
| By: | Kenneth Gillingham (Yale University, United States); Sebastien Houde (ETH Zurich, Switzerland); Arthur A. van Benthem (University of Pennsylvania, United States) |
| Abstract: | A central question in the analysis of fuel-economy policy is whether consumers are myopic with regards to future fuel costs. We provide the first evidence on consumer valuation of fuel economy from a natural experiment. We examine the short-run equilibrium effects of an exogenous restatement of fuel-economy ratings that affected 1.6 million vehicles. Using the implied changes in willingness-to-pay, we find that consumers act myopically: consumers are indifferent between $1 in discounted fuel costs and 15-38 cents in the vehicle purchase price when discounting at 4%. This myopia persists under a wide range of assumptions. |
| Keywords: | fuel economy, vehicles, myopia, undervaluation, regulation |
| JEL: | D12 H25 L11 L62 L71 Q4 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:19-321&r=all |