Publication Type
Book Chapter
Version
acceptedVersion
Publication Date
2010
Abstract
When current decisions affect welfare in the far-distant future, as with climate change, the use of a declining pure rate of time preference (PRTP) provides potentially important modeling flexibility. The difficulty of analyzing models with non-constant PRTP limits their application. We describe and provide software (available online) to implement an algorithm to numerically obtain a Markov perfect equilibrium for an optimal control problem with non-constant PRTP. We apply this software to a simplified version of the numerical climate change model used in the Stern Review. For our calibration, the policy recommendations are less sensitive to the PRTP than widely believed.
Keywords
Non-constant pure rate of time preference; Hyperbolic discounting; Numerical methods; Non-renewable resources; Observational equivalence; Climate change; Stern Review
Discipline
Econometrics | Environmental Sciences | Statistics and Probability
Research Areas
Applied Microeconomics
Publication
The Economics of Climate Change
Volume
56
Issue
1
ISBN
9781847207678
Publisher
Edward Elgar
City or Country
Cheltenham
Citation
FUJII, Tomoki and KARP, Larry.
Numerical Analysis of Non-Constant Pure Rate of Time Preference: A Model of Climate Policy. (2010). The Economics of Climate Change. 56, (1),.
Available at: https://ink.library.smu.edu.sg/soe_research/1282
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://worldcat.org/isbn/9781847207678
Included in
Econometrics Commons, Environmental Sciences Commons, Statistics and Probability Commons
Comments
edited by G.Chichilnsky. Edward Elgar (Reprint)