Climate-change adaptation: The role of fiscal policy

Catalano, Michele; Forni, Lorenzo; Pezzolla, Emilia

doi:10.1016/j.reseneeco.2019.07.005

Cited by 39 publications

(30 citation statements)

References 39 publications

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“…Many recent publications [29][30][31][32][33][34][35][36][37][38][42][43][44][45][46] explore various economic, political, financial, welfare, and regional aspects of strategic interplay between mitigation and adaptation. The majority of related papers tend to favor mitigation versus adaptation for various relevant (and not-so-relevant) reasons.…”

Section: Discussionmentioning

confidence: 99%

“…Formulas (25) follow from Equations (31) and (32) 33is small. Let acr denote the smallest critical value of the parameter a when a solution v ≥1 exists.…”

Section: Model With Adaptationmentioning

confidence: 99%

“…Different modeling assumptions about payoff functions, pollution disutility/damage, and mitigation and adaptation effectiveness are used in [29][30][31][32][33][34][35][36][37][38] to explore economic, agricultural, welfare, political, and regional aspects of strategic interactions among pollution, mitigation, and adaptation.…”

Section: Introductionmentioning

confidence: 99%

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Games with Adaptation and Mitigation

Hritonenko

Yatsenko

2020

Games

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We formulate and study a nonlinear game of n symmetric countries that produce, pollute, and spend part of their revenue on pollution mitigation and environmental adaptation. The optimal emission, adaptation, and mitigation investments are analyzed in both Nash equilibrium and cooperative cases. Modeling assumptions and outcomes are compared to other publications in this fast-developing area of environmental economics. In particular, our analysis implies that: (a) mitigation is more effective than adaptation in a crowded multi-country world; (b) mitigation increases the effectiveness of adaptation; (c) the optimal ratio between mitigation and adaptation investments in the competitive case is larger for more productive countries and is smaller when more countries are involved in the game.

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Section: Discussionmentioning

confidence: 99%

“…Formulas (25) follow from Equations (31) and (32) 33is small. Let acr denote the smallest critical value of the parameter a when a solution v ≥1 exists.…”

Section: Model With Adaptationmentioning

confidence: 99%

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Games with Adaptation and Mitigation

Hritonenko

Yatsenko

2020

Games

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“…They find that pollution abatement should not be conducted at the costs of increased debt when the capital stock is low. Finally, ignoring emissions taxation, Catalano et al (2020) investigate the impact of fiscal policy on public investments in climate change adaptation. The authors show that early debt-funded adaptation spending has a long-run beneficial effect even though negatively affecting the debt-to-GDP ratio initially.…”

Section: Introductionmentioning

confidence: 99%

Climate Policy and Optimal Public Debt

Kellner

Runkel

2020

SSRN Journal

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This paper analyzes the optimal level of public debt when taxes are used not only for funding public expenditures but also for correcting externalities from climate change. Taking into account externalities implies that the optimal policy deviates from tax smoothing. Provided cumulative marginal damages are larger from today's than from tomorrow's emissions, the internalization of externalities decreases [increases] optimal debt if tax rates are on the increasing [decreasing] side of the Laffer curve. The reversed holds if the cumulative marginal damages increase over time. Allowing for endogenous adaptation investments reduces the deviation from tax-smoothing, but nevertheless increases optimal debt.

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“…The proportionality of output and capital losses can then be demonstrated in an "AK" growth model (Barro, 2006). Usually strong persistence of disaster shocks is assumed which results in long run effects of such shocks, see Catalano et al (2018). Recent literature frames this issue in the context of DSGE models.…”

Section: Introductionmentioning

confidence: 99%

Climate Disaster Risks – Empirics and a Multi-Phase Dynamic Model

Mittnik¹,

Semmler²,

Haider³

2019

IMF Working Papers

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Recent research in financial economics has shown that rare large disasters have the potential to disrupt financial sectors via the destruction of capital stocks and jumps in risk premia. These disruptions often entail negative feedback e?ects on the macroecon-omy. Research on disaster risks has also actively been pursued in the macroeconomic models of climate change. Our paper uses insights from the former work to study disaster risks in the macroeconomics of climate change and to spell out policy needs. Empirically the link between carbon dioxide emission and the frequency of climate re-lated disaster is investigated using cross-sectional and panel data. The modeling part then uses a multi-phase dynamic macro model to explore this causal nexus and the e?ects of rare large disasters resulting in capital losses and rising risk premia. Our proposed multi-phase dynamic model, incorporating climate-related disaster shocks and their aftermath as one phase, is suitable for studying mitigation and adaptation policies.

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Climate-change adaptation: The role of fiscal policy

Cited by 39 publications

References 39 publications

Games with Adaptation and Mitigation

Games with Adaptation and Mitigation

Climate Policy and Optimal Public Debt

Climate Disaster Risks – Empirics and a Multi-Phase Dynamic Model

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