Grantham Seminar – “Integrated Assessment of Climate Change under Uncertainty”
Christian Traeger, Assistant Professor at the Department of Agricultural & Resource Economics, UC Berkeley, will be the speaker for this seminar.
Abstract from Christian’s paper: “Analytic Integrated Assessment and Uncertainty”
I develop an analytic integrated assessment model of climate change. The paper closes a gap between complex numeric models used in policy advising and stylized models built for analytic insight. The model contains an explicit carbon cycle, the CO2 radiative forcing equation, and a model of atmosphere-ocean temperature dynamics. Economic production relies on various clean and dirty, and potentially scarce energy sources. I derive a closed-form solution of the optimal carbon tax and the welfare implications from uncertainty over the carbon cycle and the climate’s sensitivity to CO2. I discuss unforeseen persistent shocks to the system (vector autoregressive uncertainty) as well as epistemological uncertainty such as a Bayesian learning. The analysis employs non-logarithmic risk attitude and distinguishes risk aversion from a decision maker’s propensity to smooth consumption over time.
Further information on Professor Traeger and his research interests can be found here.