Federal Reserve Bank of San Francisco
“Carbon Prices, Preferences, and the Timing of Uncertainty” (joint with William W. Hogan)
Abstract:
Uncertainty is persistent features of climate economics. Two prominent recent manifestations are an emphasis on tail risks and on Epstein-Zin (EZ) preferences. We explore both numerically in the DICE model and find that neither escapes decades-old discounting debates. The greater are climate sensitivity tail risks, the longer it takes to reach equilibrium temperatures, bringing discounting back to the fore. Similarly, our numerical EZ explorations show the importance of the elasticity of intertemporal substitution relative to risk aversion, pointing back to the crucial role of normative judgments around discounting far-distant futures. There appears to be no escaping economics’ philosophical roots.
March 18, 2021: SF 8:00am, NYC 11:00am, BERLIN 5:00pm
My Slides.
The Virtual Seminar on Climate Economics is an online seminar series hosted by the Federal Reserve Bank of San Francisco. The seminar is open to everyone interested in research on the economics of climate change—including topics drawn from macroeconomics, microeconomics, finance, econometrics, and environmental economics.
We convene on Zoom for a 50-minute talk and up to 25 minutes of discussion and Q&A. Register here.