Open access
Author
Date
2024Type
- Journal Article
ETH Bibliography
yes
Altmetrics
Abstract
An extensive climate policy literature provides various recommendations for mitigating climate change, but these recommendations are not supported democratically, since the models employed consider either infinitely-lived individuals or normative social objectives (or both). In contrast, the present paper provides policy recommendations capable of incorporating democratic processes. I develop an overlapping generation model with political process micro-foundations and show how democratic climate policies are interconnected with other democratic policies. Time inconsistent social objectives combined with commitment issues lead to an inefficient tax on capital accumulation and a climate policy below the efficient level; while suppressing the tax on capital accumulation generates a climate policy even further below the efficient level. I derive a novel politico-economic Keynes-Ramsey rule for the market interest rate, which is useful for calculating the climate policy level. I show that individual pure time preference, individual altruism toward descendants, and young generation political power are key determinants of democratic climate policy ambition. Show more
Permanent link
https://doi.org/10.3929/ethz-b-000667773Publication status
publishedExternal links
Journal / series
Environmental and Resource EconomicsPublisher
SpringerSubject
Climate change; Discounting; Externality; Overlapping generations; Political economyRelated publications and datasets
Is new version of: https://doi.org/10.3929/ethz-b-000567947
More
Show all metadata
ETH Bibliography
yes
Altmetrics