There is much discussion in the literature about resources society should commit to ameliorate effects of climate change. The optimal greenhouse gas abatement strategy has a direct relation social cost carbon (SCC) which measures externalities incurred emitting one ton dioxide into atmosphere. This paper studies dynamic stochastic general equilibrium model involving change allows for systematic...

Following Stollery (1998), we extend the Solow– Dasgupta–Heal model to analyze the e¤ects of global warming The rise of temperature is caused by the use of fossil resources so that the temperature level can be linked to the remaining stock of these resources. The rise of temperature a¤ects both productivity and utility. We characterize optimal solutions for the maximin and zero-discounting case...

In this paper, we study a two-sector version of the AK model proposed by Rebelo (1991), where constant returns to capital are confined to the investment goods sector. We show that this setup, an endogenous growth extension to the model of Greenwood, Hercowitz, and Krusell (1997), reproduces important features of the U.S. NIPA data, namely the secular downward trend of the price of equipment inv...

We derive a general expression for the value of information to a price-taking investor in a dynamic environment and provide a framework for its estimation from option prices. We study the value of both private and public information and break it down into its instrumental and psychic parts. We apply this framework and estimate that a consumer-investor with commonlyused preference parameters wou...

A key open question in economics is the practical, portable modeling of bounded rationality. In this short note, I report ongoing progress that is more fully developed elsewhere. I present some results from a new model in which the decision-maker builds a simplified representation of the world. The model allows to model boundedly rational dynamic programming in a parsimonious and quite tractabl...

We propose a model in which real interest rates respond to both expected consumption growth and time preferences. Exposures to future consumption growth and time preference interest rate shocks are both priced relative to the Capital Asset Pricing Model (CAPM) and the Consumption Capital Asset Pricing Model (CCAPM). However, the two types of interest rate risk have different prices, and when el...

For an overlapping generations economy with varying life-cycle productivity, non-stationary endowments, continuous time starting at −∞ (hence allowing for full anticipation), constant-returns-to-scale production and ces utility we fully characterise equilibria where output is higher than investment, which is strictly positive. Net assets (aggregate savings minus the value of the capital stock) ...

We analyze the implications of different welfare criteria on economic and population growth in the case of stochastic population change. Edgeworth (1925) argues that total utilitarianism leads to a lower economic performance and a larger population size than average utilitarianism. Following works show that while his intuition holds in a static framework, the result is unclear in a dynamic sett...

The labor supply of taxi drivers is consistent with the existence of intertemporal substitution. My analysis of the stopping behavior of New York City cabdrivers shows that daily income effects are small and that the decision to stop work at a particular point on a given day is primarily related to cumulative daily hours to that point. This is in contrast to the analysis of Camerer et al., who ...