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Macro Policies For Climate Change: Free Market Or State Intervention?

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  • Pablo Ruiz Nápoles

    (Economics Department, Universidad Nacional Autónoma de México, Mexico)

Abstract

The central issue studied in this essay is the meaning and implications for public policy of Nicholas Stern's statement that “Climate change is the greatest and widest-ranging market failure ever seen” (Stern, 2006). To deal with this issue we analyze the two big currents about public policy measures in general: market oriented and state intervention. We also present the current conceptual framework for debating public policy for analyzing the policies recommended and applied so far, to deal with Climate Change's causes and effects, from an economic perspective. We present the main arguments of the Stern Review. Finally we get into the debate between Stern and Nordhaus. Our conclusion is that there is a need for strong state intervention to make the climate change mitigation policies to reach the desired effects.

Suggested Citation

  • Pablo Ruiz Nápoles, 2014. "Macro Policies For Climate Change: Free Market Or State Intervention?," World Economic Review, World Economics Association, vol. 2014(3), pages 1-90, February.
    • Handle: RePEc:wea:worler:v:2014:y:2014:i:3:p:90
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    References listed on IDEAS

    as
    1. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801.
    2. Frank Ackerman, 2008. "Carbon Markets and Beyond: The Limited Role of Prices and Taxes in Climate and Development Policy," G-24 Discussion Papers 53, United Nations Conference on Trade and Development.
    3. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-765, September.
    4. Romain Duval, 2008. "A Taxonomy of Instruments to Reduce Greenhouse Gas Emissions and their Interactions," OECD Economics Department Working Papers 636, OECD Publishing.
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