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Environmental Policy Under Model Uncertainty: A Robust Optimal Control Approach Author info | Abstract | Publisher info | Download info | Related research | Statistics Michael Funke ()
Michael Paetz ()
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The design of optimal environmental policy inherits model uncertainty. We investigate the consequences in a simple linear model, where the aim of the policymaker is to stabilize the atmospheric content of carbon. We study how decision-makers' concerns about robustness alters policy using the Hansen and Sargent (2000, 2003, 2007) approach. The analysis shows that a policymaker, who fears about model misspecification should react more aggressively to changes in the stock of atmospheric carbon and reduce emissions stronger.
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Paper provided by Hamburg University, Department of Economics in its series Quantitative Macroeconomics Working Papers with number
20703.
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Date of creation: Mar 2007Date of revision:
Handle: RePEc:ham:qmwops:20703Contact details of provider: Postal: Von-Melle-Park 5 D-20146 Hamburg Phone: : +49 (0)40 42838-4674 Fax: +49 (0)40 42838-5546 Web page: http://www.rrz.uni-hamburg.de/wst/ More information through EDIRC
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Keywords: robust control ; model uncertainty ; environmental policy ; Other versions of this item:
Find related papers by JEL classification: C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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