Uncertainty and climate change policy design

Warwick J. McKibbin, Peter J. Wilcoxen

Research output: Contribution to journalArticle

11 Scopus citations

Abstract

This paper argues that the problem with the targets and timetable approach to climate policy is that it ignores uncertainty about costs. An alternative approach on coordinating short run prices within a long run emissions targeting framework is outlined. A global economic model is used to demonstrate the nature of the economic uncertainty about climate policy and the gains to be achieved by equalizing carbon prices across countries. The paper also shows that although price and quantity-based systems appear to be similar they can fundamentally change the international transmission of economic shocks.

Original languageEnglish (US)
Pages (from-to)463-477
Number of pages15
JournalJournal of Policy Modeling
Volume31
Issue number3
DOIs
StatePublished - May 1 2009

Keywords

  • Climate change
  • Hybrid
  • Intertemporal modeling
  • Kyoto Protocol

ASJC Scopus subject areas

  • Economics and Econometrics

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