We study how conflicting beliefs on future transition dynamics interact with short- termist preferences in shaping investment decisions. We develop a simple model where firms choose between two technological options (high- and low-carbon) based on their expected profitability over a finite...

The optimal transition to a low-carbon economy must account for adjustment costs in switching from dirty to clean capital, technological progress, and economic and climatic shocks. We study the low-carbon transition using a dynamic stochastic general equilibrium model with emissions abatement...

Recent international environmental negotiations have highlighted the importance of establishing a commonly agreed approach to attribute climate change responsabil- ities. In this paper I investigate how choices on allocation mechanisms are likely to affect optimal abatement effort paths and...

This paper presents a small macroeconomic model describing the main mechanisms of the process of credit creation by the private banking system. The model is composed of a core unit--where the dynamics of income, credit, and aggregate demand are determined--and a set of sectoral accounts that...

An expansion of economic activities with low impact on ecological resources is a crucial component of the transition to a low-carbon society. “Green” structural change is analysed here through a model with a “progressive” manufacturing sector and a “stagnant” service sector. The...

It is widely acknowledged that introducing a price on carbon represents a crucial precondition for filling the current gap in low-carbon investment. However, as this paper argues, carbon pricing in itself may not be sufficient. This is due to the existence of market failures in the process of...

The expansion of the share of economic activity taking place in sectors with low or no impact on ecological resources is a crucial component of the transition to a low-carbon society. This �green� structural change is analyzed here by means of a growth model with a...

Transitioning to a low-carbon economy will require significant investment to transform energy systems, alter the built environment and adapt infrastructure. A strategy to finance this investment is needed if the limit of a 2�C increase in global mean temperatures is to be respected. Also,...

We present an example of how public policies affect the evolution of the economy by influencing consumption habits, life styles and work attitudes. In particular, we show that governments can boost long-run growth by moving public investment away from collective transportation systems and...