Integrated Assessment of Climate Change Using an OLG Model

Abstract

This paper presents an economy and climate model of 60 overlapping generations of finite lived agents and competitive firms interacting with a physical environment. Use of energy in production results in the release of carbon to the atmosphere which can affect global climate, and thus productivity. The model is calibrated to global economic activity over the 30 years ended in 1995. The model is solved using an Euler equation approach, and simulated for three climate change scenarios, capturing optimistic, median, and pessimistic predictions on the rate and severity of climate change in response to CO2 emissions.Climate Change, Environmental Taxes, Environmental Regulation.