We develop a climate-economy model with active learning. We consider three ways of active learning: improved observations, adding observations from the past and improved theory from climate research. From the model, we find that the decision maker invests a significant amount of money in climate...

Most functions of economic impact assume that climate change is smooth. We here propose impact functions that have stochastic climate change as an input. These functions are identical in shape and have similar parameters as do deterministic impact functions. The mean stochastic impacts are thus...

This paper investigates the role of emissions control on reducing the tail-effect of the fat-tailed distribution of the climate sensitivity. Through a simple analysis on temperature distributions and some numerical simulations using the well-known DICE model, we find that the option for...

Bootstrap and smoothed bootstrap methods are used to estimate the uncertainty about the total impact of climate change, and to assess the performance of commonly used impact functions. Kernel regression is extended to include restrictions on the functional form. Impact functions do not describe...

The Ramsey rule for the consumption rate of discount assumes a transfer of money of a (representative) agent at one point in time to the same agent at another point in time. Climate policy (implicitly) transfers money not just over time but also between agents. I propose three alternative...

Estimates of the impacts of observed climate change during the 20th century obtained by different integrated assessment models (IAMs) are separated into their main natural and anthropogenic components. The estimates of the costs that can be attributed to natural variability factors and to the...

Quantile kernel regression is a flexible way to estimate the percentile of a scholar’s quality stratified by a measurable characteristic, without imposing inappropriate assumption about functional form or population distribution. Quantile kernel regression is here applied to identifying the...

We employ Monte Carlo analysis to determine the distribution of returns for various electricity generation technologies. Costs and revenues for each technology are arrived by means of a sophisticated unit commitment and economic dispatch algorithm. The results show that small amounts of coal...

A survey of the economic impact of climate change and the marginal damage costs shows that carbon dioxide emissions are a negative externality. The estimated Pigou tax and its growth rate are too low to justify the climate policy targets set by political leaders. A lower discount rate or greater...

A Bentham-Rawls welfare function is the weighted sum of the net present welfare (Bentham) and the welfare of the worst-off generation (Rawls). If utility is non-decreasing over time, optimal climate policy is more stringent in the near-term under Bentham preferences than under Bentham-Rawls...