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Trading off generations: Equity, discounting, and climate change

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  • Schneider, Maik T.
  • Traeger, Christian P.
  • Winkler, Ralph

Abstract

The prevailing literature discusses intergenerational trade-offs in climate change predominantly in terms of the Ramsey equation relying on the infinitely lived agent model. We discuss these trade-offs in a continuous time OLG framework and relate our results to the infinitely lived agent setting. We identify three shortcomings of the latter: first, underlying normative assumptions about social preferences cannot be deduced unambiguously. Second, the distribution among generations living at the same time cannot be captured. Third, the optimal solution may not be implementable in overlapping generations market economies.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 56 (2012)
Issue (Month): 8 ()
Pages: 1621-1644

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Handle: RePEc:eee:eecrev:v:56:y:2012:i:8:p:1621-1644

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Web page: http://www.elsevier.com/locate/eer

Related research

Keywords: Climate change; Discounting; Infinitely lived agents; Intergenerational equity; Overlapping generations; Time preference;

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References

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Cited by:
  1. Lee H. Endress & Sittidaj Pongkijvorasin & James Roumasset & Christopher Wada, 2013. "Intergenerational Equity with Individual Impatience in an OLG Model of Optimal and Sustainable Growth," Working Papers 2013-9, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
  2. Endress, Lee H. & Pongkijvorasin, Sittidaj & Roumasset, James & Wada, Christopher A., 2014. "Intergenerational equity with individual impatience in a model of optimal and sustainable growth," Resource and Energy Economics, Elsevier, vol. 36(2), pages 620-635.

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