Question

In a newly published article in the scientific journal “International Economic Review”, some authors study how carbon taxation could help reducing the climate change problem. They find that: Carbon taxation is mostly studied in social planner or infinitely‐lived‐agent models, which obscure carbon taxation's potential to produce a generational win win. This paper's large‐scale, dynamic 55‐period, overlapping generations model calculates the carbon‐tax policy delivering the highest uniform welfare gain to all current and future generations. Our model features coal, oil, and gas, increasing extraction costs, clean energy, technical and demographic change, and Nordhaus' (2017) carbon/temperature/damage functions. Assuming high‐end carbon damages, the optimal carbon tax is $70, rising annually at 1.5 percent. This policy raises all generations' welfare by almost 5 percent. However, doing so requires major intergenerational redistribution.

b.How is an economic model (à la Nordhaus) with “carbon/temperature/damage functions” set up?

Answer 1

If fossil fuels area unit burnt by the corporate then government imposes a fee referred to as the carbon tax. Greenhouse gases cause warming which ends up in climate disturbances.

The external prices are going to be paid by corporations within the style of a carbon tax. the value of world warming is going to be reduced with the assistance of a carbon tax.

By victimization fossil fuels businesses aren't charged accurately.

This semiconductor diodes to promote failure and cause depression.

The economy would shock if there's an increase during a carbon tax. it's regressive.

If fossil fuels area unit costlier the lower-income folk's area unit is burdened. they're charged high costs for gas, electricity etc.carbon tax is introduced for this purpose.

Some folks won't have alternatives and different alternatives ought to even be utilized by the government besides the carbon tax.