Overlapping Generations or Infinitely-Lived Agents: Intergenerational Altruism and the Economics of Global Warming
AbstractDo we need an overlapping generations model for the economics of global warming? To answer this question, an infinitely-lived agent (ILA) approach and an overlapping generations (OLG) model are contrasted. ILA and OLG can be viewed as polar representations of intergenerational altruism. With ILA an immortal agent acts through his investment/savings decisions as trustee on the behalf of the future generations. With OLG, agents need not behave altruistic. They simply save during working years and dissave completely during retirement. Nevertheless, ILA and OLG must not differ in their implication for greenhouse policy. Greenhouse gas abatement is a straightforward alternative to physical capital formation and, even without altruism, each age cohort has an incentive to provide current abatement in order to reduce future damages attributable to climate change. Indeed, under reasonable assumptions and parameter values, our simulations reveal such an invariance result. Provided carbon taxes are the only policy tool and tax revenues are recycled through socially mandated rules, projections of economic growth, climate change and energy consumption are only insignificantly affected by the choice of approach. Copyright Kluwer Academic Publishers 1997
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 10 (1997)
Issue (Month): 1 (July)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100263
climate policy; intergenerational altruism; overlapping generations; infinitely-lived agents; computable general equilibrium;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephan, Gunter, 1993. "Myopic decision rules and the innovation of techniques: Formulation and solution of intertemporal equilibrium models," Structural Change and Economic Dynamics, Elsevier, vol. 4(1), pages 127-143, June.
- Howarth, Richard B & Norgaard, Richard B, 1992. "Environmental Valuation under Sustainable Development," American Economic Review, American Economic Association, vol. 82(2), pages 473-77, May.
- Marini Giancarlo & Scaramozzino Pasquale, 1995. "Overlapping Generations and Environmental Control," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 64-77, July.
- Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
- d'Arge, Ralph C & Schulze, William D & Brookshire, David S, 1982. "Carbon Dioxide and Intergenerational Choice," American Economic Review, American Economic Association, vol. 72(2), pages 251-56, May.
- Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-37, July.
- Solow, Robert M, 1986. " On the Intergenerational Allocation of Natural Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(1), pages 141-49.
- Schelling, Thomas C, 1995. "Intergenerational discounting," Energy Policy, Elsevier, vol. 23(4-5), pages 395-401.
- Escapa García, Marta & Ansuategui Cobo, José Alberto & Pérez, Azucena, 2003. "International and Intergenerational Dimensions of Climate Change: North-South Cooperation in an Overlapping Generations Framework," IKERLANAK 2003-06, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
- Gerlagh, Reyer & van der Zwaan, B. C. C., 2001. "The effects of ageing and an environmental trust fund in an overlapping generations model on carbon emission reductions," Ecological Economics, Elsevier, vol. 36(2), pages 311-326, February.
- Georg Müller-Fürstenberger & Gunter Stephan, 1999. "Banking and Trade of Carbon Emission Rights: A CGE Analysis," Diskussionsschriften dp9906, Universitaet Bern, Departement Volkswirtschaft.
- Schneider, Maik T. & Traeger, Christian P. & Winkler, Ralph, 2012. "Trading off generations: Equity, discounting, and climate change," European Economic Review, Elsevier, vol. 56(8), pages 1621-1644.
- Gerlagh, Reyer & Lise, Wietze, 2005. "Carbon taxes: A drop in the ocean, or a drop that erodes the stone? The effect of carbon taxes on technological change," Ecological Economics, Elsevier, vol. 54(2-3), pages 241-260, August.
- Richard Howarth, 2000. "Climate Change and the Representative Agent," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(2), pages 135-148, February.
- Shiell, Leslie, 2003. "Descriptive, prescriptive and second-best approaches to the control of global greenhouse gas emissions," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1431-1452, August.
- Gunter Stephan & Georg Müller-Fürstenberger, 2004. "Does Distribution Matter? Efficiency, Equity and Flexibility in Greenhouse Gas Abatement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 27(1), pages 87-107, January.
- Alberto Ansuategi & Marta Escapa, 2004. "Is international cooperation on climate change good for the environment?," Economics Bulletin, AccessEcon, vol. 17(7), pages 1-11.
- repec:ebl:ecbull:v:17:y:2004:i:7:p:1-11 is not listed on IDEAS
- Reyer Gerlagh & Bob van der Zwaan & Marjan Hofkes & Ger Klaassen, 2004. "Impacts of CO 2-Taxes in an Economy with Niche Markets and Learning-by-Doing," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 28(3), pages 367-394, July.
- Reyer Gerlagh & Marjan W. Hofkes, 2004. "Time Profile of Climate Change Stabilization Policy," Working Papers 2004.139, Fondazione Eni Enrico Mattei.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.