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Kernel density decomposition with an application to the social cost of carbon

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  • Richard S. J. Tol

Abstract

A kernel density is an aggregate of kernel functions, which are itself densities and could be kernel densities. This is used to decompose a kernel into its constituent parts. Pearson's test for equality of proportions is applied to quantiles to test whether the component distributions differ from one another. The proposed methods are illustrated with a meta-analysis of the social cost of carbon. Different discount rates lead to significantly different Pigou taxes, but not different growth rates. Estimates have not varied over time. Different authors have contributed different estimates, but these differences are insignificant. Kernel decomposition can be applied in many other fields with discrete explanatory variables.

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  • Richard S. J. Tol, 2020. "Kernel density decomposition with an application to the social cost of carbon," Papers 2003.09276, arXiv.org.
    • Handle: RePEc:arx:papers:2003.09276
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    Cited by:

    1. David Anthoff & Richard S. J. Tol, 2022. "Testing the Dismal Theorem," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 9(5), pages 885-920.

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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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