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A comparison of reduced-form permit price models and their empirical performances

By Georg Grüll and Luca Taschini


Equilibrium models have been proposed in literature with the aim of describing the evolution of the price of emission permits. This paper derives first a reducedform model from an equilibrium model and thereby explains how existing reducedform models are related to equilibrium models. Second, by means of calibration to historical data, it is shown how these reduced-form models perform in the current price-evolution framework also with respect to standard continuous time stochastic models

Topics: GE Environmental Sciences, HC Economic History and Conditions
Publisher: Centre for Climate Change Economics and Policy and Grantham Research Institute on Climate Change and the Environment
Year: 2010
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Provided by: LSE Research Online

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