Macrodynamics and climate : reformulation
Gaël Giraud and Paul Valcke
Designing policy for global warming requires an integrated analysis of the interplay between the economy and the environment. The consensus is growing that, despite their dominance in the economics literature and their influence in public discussion and policymaking, the methodology employed so far by most Integrated Assessment Models (iams) 'rests on flawed foundations' (Stiglitz et al. 2016). This is particularly worrisome in the face of the immense risks and challenges of global warming and the radical changes in our economies that an effective response requires. This paper introduces an alternative paradigm, idee (Integrated Dynamic Environment- Economy), based on coupling a medium-size climate model with nonlinear, out-of-equilibrium, stock-flow-consistent macroeconomic dynamics in continuous time. Idee allows for multiple economic steady states, endoRgenous business cycles, endogenous growth, corporate default, and the short- and long-run assessment of various mitigation and adaptation policies. We argue that this approach is suitable for providing insights into managing the transition to net-zero emissions and coping with damages induced by the ecological crisis.
Year of publication: |
2023
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Authors: | Giraud, Gaël ; Valcke, Paul |
Published in: |
Oxford open economics. - Oxford : Oxford University Press, ISSN 2752-5074, ZDB-ID 3123700-9. - Vol. 2.2023, Art.-No. odad007, p. 1-16
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Subject: | climate change | extreme risk | market imperfections | climate policy | integrated assessment | stock-flow consistency | Theorie | Theory | Klimawandel | Climate change | Klimaschutz | Climate protection | Unvollkommener Markt | Incomplete market | Risiko | Risk |
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