On Modeling and Interpreting the Economics of Catastrophic Climate Change

DSpace/Manakin Repository

On Modeling and Interpreting the Economics of Catastrophic Climate Change

Citable link to this page

 

 
Title: On Modeling and Interpreting the Economics of Catastrophic Climate Change
Author: Weitzman, Martin L.
Citation: Weitzman, Martin L. 2009. On modeling and interpreting the economics of catastrophic climate change. Review of Economics and Statistics 91(1): 1-19.
Full Text & Related Files:
Abstract: With climate change as prototype example, this paper analyzes the implications of structural uncertainty for the economics of low-probability, high-impact catastrophes. Even when updated by Bayesian learning, uncertain structural parameters induce a critical “tail fattening” of posterior-predictive distributions. Such fattened tails have strong implications for situations, like climate change, where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages. This paper shows that the economic consequences of fat-tailed structural uncertainty (along with unsureness about high-temperature damages) can readily outweigh the effects of discounting in climate-change policy analysis.
Published Version: http://dx.doi.org/10.1162/rest.91.1.1
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3693423
Downloads of this work:

Show full Dublin Core record

This item appears in the following Collection(s)

 
 

Search DASH


Advanced Search
 
 

Submitters