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On the Uses of Benefit-Cost Reasoning in Choosing Policy Toward Global Climate Change


  • David F. Bradford


In the debate about the correct discount rate to use in evaluating policy with regard to climate change, which covers the entire world and extends for centuries, the conditions for deploying benefit-cost analysis are often overlooked. Where (a) income distributional effects of policies are large and (b) one cannot take for granted compensating adjustment in other policy instruments affecting distribution, simple aggregation of gains and losses is unlikely to provide a convincing basis for action, as an ethical matter, or predictor of policy, as a political matter.

Suggested Citation

  • David F. Bradford, 1997. "On the Uses of Benefit-Cost Reasoning in Choosing Policy Toward Global Climate Change," NBER Working Papers 5920, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5920
    Note: PE

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    References listed on IDEAS

    1. Jose Manuel Campa & Linda S. Goldberg, 2001. "Employment Versus Wage Adjustment And The U.S. Dollar," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 477-489, August.
    2. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-245, May.
    3. Richard C. Marston, 1996. "The Effects of Industry Structure on Economic Exposure," NBER Working Papers 5518, National Bureau of Economic Research, Inc.
    4. Jeffrey A. Frankel, 1993. "On Exchange Rates," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061546, January.
    5. Harrigan, James, 1996. "Openness to trade in manufactures in the OECD," Journal of International Economics, Elsevier, vol. 40(1-2), pages 23-39, February.
    6. Marston, R.C., 1996. "The Effects of Industry Structure on Economic Exposure," Weiss Center Working Papers 96-3, Wharton School - Weiss Center for International Financial Research.
    7. Goldberg, Linda S, 1993. "Exchange Rates and Investment in United States Industry," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 575-588, November.
    8. Linda S. Goldberg & Joseph Tracy, 2001. "Exchange rates and wages," Staff Reports 116, Federal Reserve Bank of New York.
    9. Dornbusch, Rudiger, 1987. "Exchange Rates and Prices," American Economic Review, American Economic Association, vol. 77(1), pages 93-106, March.
    10. Campa, Jose Manuel & Goldberg, Linda S, 1999. "Investment, Pass-Through, and Exchange Rates: A Cross-Country Comparison," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 287-314, May.
    11. Bodnar, Gordon M. & Gentry, William M., 1993. "Exchange rate exposure and industry characteristics: evidence from Canada, Japan, and the USA," Journal of International Money and Finance, Elsevier, vol. 12(1), pages 29-45, February.
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    Cited by:

    1. Marc Vielle & Alain L. Bernard, 1998. "Un exemple d'utilisation : le coût de politiques de réduction des gaz à effet de serre," Économie et Prévision, Programme National Persée, vol. 136(5), pages 33-48.
    2. Erling Røed Larsen, 2002. "The Political Economy of Global Warming. From Data to Decisions," Discussion Papers 322, Statistics Norway, Research Department.
    3. Klaus Keller & Kelvin Tan & Francois M.M. Morel & David F. Bradford, 1999. "Preserving the Ocean Circulation: Implications for Climate Policy," CESifo Working Paper Series 199, CESifo Group Munich.
    4. Hans-Werner Sinn, 1999. "Inflation and Welfare: Comment on Robert Lucas," NBER Working Papers 6979, National Bureau of Economic Research, Inc.
    5. Prajit Dutta & Roy Radner, 2006. "Population growth and technological change in a global warming model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 251-270, October.
    6. J.K. Horowitz, 2002. "Preferences in the Future," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(3), pages 241-258, March.
    7. Louis Kaplow, 2006. "Discounting Dollars, Discounting Lives: Intergenerational Distributive Justice and Efficiency," NBER Working Papers 12239, National Bureau of Economic Research, Inc.

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    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis


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