Uncertain Climate Policy and the Green Paradox

Sjak Smulders, Yacov Tsur, Amos Zemel*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

7 Scopus citations

Abstract

Unintended consequences of announcing a climate policy well in advance of its implementation have been studied in a variety of situations. We show that a phenomenon akin to the so-called “Green-Paradox” holds also when the policy implementation date is uncertain. Governments are compelled, by international and domestic pressure, to demonstrate an intention to reduce greenhouse gas emissions. Taking actual steps, such as imposing a carbon tax on fossil energy, is a different matter altogether and depends on a host of political considerations. As a result, economic agents often consider the policy implementation date to be uncertain. We show that in the interim period between the policy announcement and its actual implementation the emission of green-house gases increases vis-à-vis business-as-usual.

Original languageEnglish
Title of host publicationDynamic Modeling and Econometrics in Economics and Finance
PublisherSpringer Science and Business Media Deutschland GmbH
Pages155-168
Number of pages14
DOIs
StatePublished - 2014

Publication series

NameDynamic Modeling and Econometrics in Economics and Finance
Volume15
ISSN (Print)1566-0419
ISSN (Electronic)2363-8370

Bibliographical note

Publisher Copyright:
© 2014, Springer-Verlag Berlin Heidelberg.

Keywords

  • Capital Stock
  • Climate Policy
  • Consumption Process
  • Fossil Energy
  • Paradoxical Outcome

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