Journal
ECOLOGICAL ECONOMICS
Volume 146, Issue -, Pages 164-172Publisher
ELSEVIER
DOI: 10.1016/j.ecolecon.2017.10.020
Keywords
Climate change; Economic growth; Integrated assessment; Demand and distribution; Energy productivity; Unemployment
Funding
- Institute for New Economic Thinking (INET) [IN01400031]
- Austrian Science Fund (FWF) [J 3633]
- Austrian Science Fund (FWF) [J3633] Funding Source: Austrian Science Fund (FWF)
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We present a model based on Keynesian aggregate demand and labor productivity growth to study how climate damage affects the long-run evolution of the economy. Climate change induced by greenhouse gas lowers profitability, reducing investment and cutting output in the short and long runs. Short-run employment falls due to deficient demand. In the long run productivity growth is slower, lowering potential income levels. Climate policy can increase incomes and employment in the short and long runs while a continuation of business-as-usual leads to a dystopian income distribution with affluence for few and high levels of unemployment for the rest.
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