Believe me when I say green! Heterogeneous expectations and climate policy uncertainty | Emanuele Campiglio
Emanuele Campiglio will be discussing Believe me when I say green! Heterogeneous expectations and climate policy uncertainty
Abstract
We develop a dynamic model where firms take investment decisions depending on their expectations of future carbon price paths, themselves a function of the perceived credibility of the policy-maker mitigation plans. We show that: (i) a ‘high-carbon trap’ might arise if the policy-maker is excessively concerned about transition costs, especially if stated climate goals are ambitious; (ii) even in presence of a fully committed policy-maker, belief dynamics significantly affect the speed and shape of the low-carbon transition.
Grantham Workshops are only open to LSE researchers and alumni. If you wish to attend the workshop in person or online please sign up to our workshop mailing list.