Working Paper 33


Equilibrium models have been proposed in literature with the aim of describing the evolution of the price of emission permits.

This paper derives first a reduced-form model from an equilibrium model, and thereby explains how existing reduced-form models are related to equilibrium models.

Second, by means of calibration to historical data, it is shown how these reduced-form models perform in the current price-evolution framework, also with respect to standard continuous time stochastic models.

Georg Grull and Luca Taschini

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