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Pindyck, Robert S. - 2012

Climate policy poses a dilemma for environmental economists. The economic argument for stringent GHG abatement is far from clear. There is disagreement among both climate scientists and economists over the likelihood of alternative climate outcomes, over the nature and extent of the uncertainty...

Persistent link: https://www.econbiz.de/10013104077

Fat Tails, Thin Tails, and Climate Change Policy

Pindyck, Robert S. - 2010

the distribution for outcomes is fat-tailed. Furthermore, depending on the bound on marginal utility, the index of risk …

Persistent link: https://www.econbiz.de/10013138396

Modeling the Impact of Warming in Climate Change Economics

Pindyck, Robert S. - 2014

Any economic analysis of climate change policy requires some model that describes the impact of warming on future GDP and consumption. Most integrated assessment models (IAMs) relate temperature to the level of real GDP and consumption, but there are theoretical and empirical reasons to expect...

Persistent link: https://www.econbiz.de/10013070326

Uncertain Outcomes and Climate Change Policy

Pindyck, Robert S. - 2010

Focusing on tail effects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. I estimate the fraction of consumption w*(tau) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is...

Persistent link: https://www.econbiz.de/10013151360

Risk and Return in Environmental Economics

Pindyck, Robert S. - 2012

I examine the risk/return tradeoff for environmental investments, and its implications for policy choice. Consider a … risk? Using a simple model of a stock externality (e.g., temperature) that evolves stochastically, I examine the … combinations of risk and expected returns as policy objectives. Given cost estimates for reducing risk and increasing expected …

Persistent link: https://www.econbiz.de/10013103046

Investments of Uncertain Cost

Pindyck, Robert S. - 2008

I study irreversible investment decisions when projects take time to complete, and are subject to two types of uncertainty over the cost of completion. The first is technical uncertainty, i.e., uncertainty over the amount of time, effort, and materials that will ultimately be required to...

Persistent link: https://www.econbiz.de/10012774773

A Markup Interpretation of Optimal Rules for Irreversible Investment

Dixit, Avinash - 2008

We re-examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically fluctuating benefit. The optimal investment rule satisfies a trade-off between a larger versus a later net benefit; we show that this trade-off is closely analogous to the standard...

Persistent link: https://www.econbiz.de/10012774956

Uncertainty in Environmental Economics

Pindyck, Robert S. - 2007

In a world of certainty, the design of environmental policy is relatively straightforward, and boils down to maximizing the present value of the flow of social benefits minus costs. But the real world is one of considerable uncertainty -- over the physical and ecological impact of pollution,...

Persistent link: https://www.econbiz.de/10012778137

The Use and Misuse of Models for Climate Policy

Pindyck, Robert S. - 2015

In recent articles, I have argued that integrated assessment models (IAMs) have flaws that make them close to useless as tools for policy analysis. IAM-based analyses of climate policy create a perception of knowledge and precision that is illusory, and can fool policy-makers into thinking that...

Persistent link: https://www.econbiz.de/10013024159

Economic Instability and Aggregate Investment

Pindyck, Robert S.; Solimano, Andres - 2021

A recent literature suggests that because investment expenditures are irreversible and can be delayed, they may be highly sensitive to uncertainty. We briefly summarize the theory, stressing its empirical implications. We then use cross-section and time-series data for a set of developing and...

Persistent link: https://www.econbiz.de/10013222915