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Home | Courses | Climate Change

Climate Change

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Course description

This course focuses on climate change: one of the greatest challenges of our time. What can the science of economics teach us about its causes and potential solutions? What are the costs and benefits of climate change? Its impact on poverty? Should we tax carbon, cap-and-trade emission rights, or subsidize solar and wind power? Does the answer depend on how we value the future? Why/when should we discount the distant future less than the proximate future? What is the impact of risk and true uncertainty (ambiguity) on the discount rate? Can a trade off between growth and the environment be avoided, if so with what sort of policies? Does trade harm the environment? Will our industry move abroad if we take a leading role and 'go it alone'? Can well intended climate policies actually accelerate global warming? What are good second-best climate policies? How to deal with climate tipping points?
Lecture I: Introduction: Energy Policy, Climate Change and Economic Growth; evidence on drivers of global warming and the effects of global warming on the economy (Rick and Sweder)
Lecture 2: Economics of Discounting (Sweder)
Lecture 3: Growth, Scarce Resources and Directed Technical Change (Sweder)
Lecture 4: Trade, Pollution Havens, and Carbon Leakage (TBD; carbon taxes, trade and border tax adjustments; Rick/Sweder)
Lecture 5: “Distributional aspects of climate policy; Climate Change, poverty and inequality (Rick/Sweder)
Lecture 6: Green Paradoxes (Rick)
Lecture 7: Dealing with Climate Catastrophes (Rick)

Course literature

Primary reading
Acemoglu, D., Philippe Aghion, Leonardo Bursztyn and David Hemous, The environement and directed technical change, American Economic review, Volume 102, Number 1, February 2012, pp. 131-166(36).
Aichele, R. and G. Felbermayr. 2015. Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade. Review of Economics and Statistics. March 2015, Vol. 97, No. 1, Pages 104-115.
Burke, M., Hsiang, S. and E. Miguel (2015),”Global Non-Linewar Effects of Temperature on Economic Production”, Nature, October 2015.
Cai, Y. and T. Lontzek (2019). “The Social Cost of Carbon with Economic and Climate Risk”, Journal of Political Economy, August 2019.
Copeland and Taylor, Trade and the Environment, Princeton University Press, 2003. Chapters 2 and 5.
Copeland, B.R. and M.S. Taylor, (2004). "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
Gollier, C., (2012),Pricing the planet’s future: The economics of discount-ing in an uncertain world, Princeton University Press, October 2012.
Keller, W. and A. Levinson, “Pollution Abatement Costs and Foreign Direct Investment Inflows to U.S. States”, The Review of Economics and Statistics, 2002, vol. 84, issue 4, pages 691-703.
Levinson, Arik. (2009). "Technology, International Trade, and Pollution from US Manufacturing." American Economic Review, 99(5): 2177-92.
Nordhaus, William D & Yang, Zili, (1996). "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, vol. 86(4), pages 741-765.
Lemoine, D. and C. Traeger (2014), “Watch your step: optimal policy in a tipping climate”, American Economic Journal: Economic Policy, 6, 1, 137-166.
Olijslagers, S. and S. van Wijnbergen (2019). “Discounting the Future: on Climate Change, Ambiguity Aversion and Epstein-Zin Preferences”, CEPR DP 13708,September 2019.
Pindyck, R. (2017). “ the Use and Misuse of Models for Climate Policy”, Review of Environmental Economics and Policy.
Pindyck, R. and I. Martin (2015), “The Strange Economics of Scylla and Charybdis”, American Economic Review, 105(10), pp 2947-2985.
Ploeg, F. van der (2016). “Second-best carbon taxation in the global economy: the Green Paradox and carbon leakage revisited”, Journal of Environmental Economics and Management, 78, 85-105.
Ploeg, F. van der. (2020), “Discounting and Climate Policy”, forthcoming, Oxford Research Encyclopedia of Economics and Finance.
Ploeg, F. van der, and S.Poelhekke (2015). "Green havens and pollution havens", The World Economy, 38(7), 1159–1178.
Ploeg, F. van der and A.J. de Zeeuw (2015). “Climate tipping and economic growth: precautionary saving and the social cost of carbon”. [ oxcarrerp2013118.pdf ].
Rezai, A. and F. van der Ploeg (2016). “Second-best renewable subsidies to de-carbonize the economy: commitment and the Green Paradox”, Environmental and Resource Economics.[oxcarrerp2016168].