This paper proposes an environmental DSGE model with deforestation of a tropical rain forest. The forest can be used to produce goods, but it also affects the well-being of the representative individual. Environmental policy is implemented with the taxation of the deforestation activity. We...

Shock is a term of art that pervades modern economics appearing in nearly a quarter of all journal articles in economics and in nearly half in macroeconomics. Surprisingly, its rise as an essential element in the vocabulary of economists can be dated only to the early 1970s. The paper traces the...