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What Really Matters: Discounting, Technological Change and Sustainable Climate

Author

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  • Georg Müller-Fürstenberger
  • Gunter Stephan

Abstract

This paper discusses the interplay between the choice of the discount rate, greenhouse gas mitigation and endogenous technological change. Neglecting the issue of uncertainty it is shown that the green golden rule stock of atmospheric carbon is uniquely determined, but is not affected by technological change. More general it is shown analytically within the framework of a reduced model of integrated assessment that optimal stationary stocks of atmospheric carbon depend on the choice of the discount rate, but are independent of the stock of technological knowledge. These results are then reinforced numerically in a fully specified integrated assessment analysis.

Suggested Citation

  • Georg Müller-Fürstenberger & Gunter Stephan, 2010. "What Really Matters: Discounting, Technological Change and Sustainable Climate," Diskussionsschriften dp1008, Universitaet Bern, Departement Volkswirtschaft.
  • Handle: RePEc:ube:dpvwib:dp1008
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    References listed on IDEAS

    as
    1. Brannlund, Runar & Ghalwash, Tarek & Nordstrom, Jonas, 2007. "Increased energy efficiency and the rebound effect: Effects on consumption and emissions," Energy Economics, Elsevier, vol. 29(1), pages 1-17, January.
    2. Loschel, Andreas, 2002. "Technological change in economic models of environmental policy: a survey," Ecological Economics, Elsevier, vol. 43(2-3), pages 105-126, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Integrated Assessment; discount rate; endogenous technological change; climate change;

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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