Amigues, Jean-Pierre and Moreaux, Michel (2013) Optimal growth under a climate constraint. TSE Working Paper, n. 13-436

Preview

Text Download (402kB) | Preview

Abstract

Inside a standard growth model with exhaustible resources, we study the
optimal growth policy of an economy submitted to a climate constraint, taking
the form of a ceiling over admissible atmospheric carbon concentrations.
The optimal scenario is a three phases path: a rise of carbon concentrations
until the carbon cap is attained followed by a time phase constrained by the
ceiling on possible emissions and a last unconstrained phase of resource depletion.
Depending upon the primitives of the model we show that the optimal
path may be of two main kinds: paths characterized by a positive growth
of the economy and paths corresponding to a complex structural adjustment
process involving negative growth during some time interval.