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Modeling the Economics of Greenhouse Gas Abatement: An Overlapping Generations Perspective

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  • Tobias Rasmussen

    (International Monetary Fund)

Abstract

This paper analyzes the implications of using an overlapping generations model for simulating the effects of greenhouse gas abatement policies rather than the traditional approach based on an infinitely lived agent. The overlapping generations framework has many appealing characteristics. In particular, by not aggregating different generations, it avoids imposing implicitly a social welfare function that discounts the utility of people living in the future. The results show that the costs of imposing a tax on CO2 emissions are highly unequally distributed. Generations to be born a century from now stand to incur substantial losses while those alive in the near future will suffer much less and the current old may even experience a gain. (Copyright: Elsevier)

Suggested Citation

  • Tobias Rasmussen, 2003. "Modeling the Economics of Greenhouse Gas Abatement: An Overlapping Generations Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 99-119, January.
  • Handle: RePEc:red:issued:v:6:y:2003:i:1:p:99-119
    DOI: 10.1016/S1094-2025(02)00010-8
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    References listed on IDEAS

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    1. Charles T. Carlstrom & David Altig, 1999. "Marginal Tax Rates and Income Inequality in a Life-Cycle Model," American Economic Review, American Economic Association, vol. 89(5), pages 1197-1215, December.
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    8. Rasmussen, Tobias N. & Rutherford, Thomas F., 2004. "Modeling overlapping generations in a complementarity format," Journal of Economic Dynamics and Control, Elsevier, vol. 28(7), pages 1383-1409, April.
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    Citations

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    Cited by:

    1. Kavuncu, Y. Okan & Knabb, Shawn D., 2005. "Stabilizing greenhouse gas emissions: Assessing the intergenerational costs and benefits of the Kyoto Protocol," Energy Economics, Elsevier, vol. 27(3), pages 369-386, May.
    2. Garau, Giorgio & Lecca, Patrizio & Mandras, Giovanni, 2013. "The impact of population ageing on energy use: Evidence from Italy," Economic Modelling, Elsevier, vol. 35(C), pages 970-980.
    3. Frédéric Gonand, 2015. "The Carbon Tax, Ageing and Pension Deficits," Post-Print hal-01251698, HAL.
    4. Rausch, Sebastian & Abrell, Jan, 2014. "Optimal Dynamic Carbon Taxation in a Life-Cycle Model with Distortionary Fiscal Policy," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100513, Verein für Socialpolitik / German Economic Association.
    5. Laurence J. Kotlikoff & Andrey Polbin & Andrey Zubarev, 2016. "Will the Paris Accord Accelerate Climate Change?," NBER Working Papers 22731, National Bureau of Economic Research, Inc.
    6. KAVUNCU Y. Okan, "undated". "Reconsidering Intergenerational Cost-Benefit Analysis of Climate Change: An Endogenous Abatement Approach," EcoMod2003 330700079, EcoMod.
    7. Torben M. Andersen & Joydeep Bhattacharya & Pan Liu, 2016. "Resolving Intergenerational Conflict over the Environment under the Pareto Criterion," CESifo Working Paper Series 6053, CESifo Group Munich.
    8. Leach, Andrew J., 2009. "The welfare implications of climate change policy," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 151-165, March.

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