William D. Nordhaus: Integrating climate change into long-term macroeconomic analysis
Schubert, Katheline
William D. Nordhaus: Integrating climate change into long-term macroeconomic analysis - 2020.
25
This article follows the tradition of the Revue d’Économie Politique of presenting the new “Nobel Prize in Economics” contributions each year. It is dedicated to William Nordhaus, rewarded for having integrated climate change into long-term macroeconomic analysis. I first present the DICE model, explaining in detail the equations of the climate and economic sub-models as well as the calibration procedure. I then show how DICE is used to calculate the social cost of carbon. Lastly, I present some of the very numerous extensions of the model at present, in order to highlight the power of the analytic framework, as well as its limits and the ways forward. JEL codes: 04, 044, Q5, Q54
William D. Nordhaus: Integrating climate change into long-term macroeconomic analysis - 2020.
25
This article follows the tradition of the Revue d’Économie Politique of presenting the new “Nobel Prize in Economics” contributions each year. It is dedicated to William Nordhaus, rewarded for having integrated climate change into long-term macroeconomic analysis. I first present the DICE model, explaining in detail the equations of the climate and economic sub-models as well as the calibration procedure. I then show how DICE is used to calculate the social cost of carbon. Lastly, I present some of the very numerous extensions of the model at present, in order to highlight the power of the analytic framework, as well as its limits and the ways forward. JEL codes: 04, 044, Q5, Q54
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