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Modeling the Dynamics of the Transition to a Green Economy

In: Dynamic Optimization in Environmental Economics

Author

Listed:
  • Stefan Mittnik

    (Ludwig-Maximilians-Universität München)

  • Willi Semmler

    (New School for Social Research)

  • Mika Kato

    (Howard University)

  • Daniel Samaan

    (New School for Social Research)

Abstract

Recent academic work argues for a greater urgency to implement effective climate policies to combat global warming. Concrete policy proposals for reducing CO2 emissions have been developed by the IPCC. Yet, it has not been sufficiently explored to what extent mitigation policies, such as cap-and-trade, carbon tax or the phasing in of green technology, will entail structural change in an economy. Here, we explore the transition to a green economy using a growth model with structural change resulting from three types of policies: (1) shifting preferences, (2) taxing high-carbon intensive goods, or (3) imposing a carbon tax while subsidizing low-carbon intensive economic activities. We also will consider a strategy of imposing a carbon tax and subsidizing labor cost. Our focus will be on two questions: What impact do the policies under consideration have on employment and output, and whether resulting growth paths will be stable. We also indicate how the effects of carbon policies can be assessed empirically.

Suggested Citation

  • Stefan Mittnik & Willi Semmler & Mika Kato & Daniel Samaan, 2014. "Modeling the Dynamics of the Transition to a Green Economy," Dynamic Modeling and Econometrics in Economics and Finance, in: Elke Moser & Willi Semmler & Gernot Tragler & Vladimir M. Veliov (ed.), Dynamic Optimization in Environmental Economics, edition 127, pages 87-109, Springer.
    • Handle: RePEc:spr:dymchp:978-3-642-54086-8_4
    DOI: 10.1007/978-3-642-54086-8_4
    as

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