Back to Search
Start Over
Relative Prices and Climate Policy: How the Scarcity of Nonmarket Goods Drives Policy Evaluation
- Source :
- American Economic Journal: Economic Policy. 13:168-201
- Publication Year :
- 2021
- Publisher :
- American Economic Association, 2021.
-
Abstract
- Climate change not only impacts production and market consumption but also the relative scarcity of nonmarket goods, such as environmental amenities. We study fundamental drivers of the resulting relative price changes, their potential magnitude, and their implications for climate policy in Nordhaus’s Dynamic Integrated Climate-Economy (DICE) model, thereby addressing one of its key criticisms. We propose plausible ranges for these relative prices changes based on best available evidence. Our central calibration reveals that accounting for relative prices is equivalent to decreasing pure time preference by 0.6 percentage points and leads to a more than 50 percent higher social cost of carbon. (JEL D61, H43, Q51, Q54, Q58)
- Subjects :
- Consumption (economics)
Discounting
Natural resource economics
Social cost
media_common.quotation_subject
05 social sciences
Nonmarket forces
Relative price
Scarcity
0502 economics and business
Economics
050202 agricultural economics & policy
Allocative efficiency
050207 economics
Time preference
General Economics, Econometrics and Finance
media_common
Subjects
Details
- ISSN :
- 1945774X and 19457731
- Volume :
- 13
- Database :
- OpenAIRE
- Journal :
- American Economic Journal: Economic Policy
- Accession number :
- edsair.doi...........a3109e2d2fa46fc4236374349bbc5916