Dundee Discussion Papers in Economics 267: Global warming and fat tailed-uncertainty: rethinking the timing and intensity of climate policy

Yu-Fu Chen; Michael Funke

Dundee Discussion Papers in Economics 267: Global warming and fat tailed-uncertainty: rethinking the timing and intensity of climate policy

Yu-Fu Chen
, Michael Funke

Research output: Working paper/Preprint › Discussion paper

54 Downloads (Pure)

Abstract

The possibility of low-probability extreme natural events has reignited the debate over the optimal
intensity and timing of climate policy. In this paper, we contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real
options model with “tail risk”. In a nutshell, our results indicate the importance of tail risk and call for
foresighted pre-emptive climate policies.

Original language	English
Publisher	University of Dundee
Number of pages	22
Publication status	Published - Jun 2012

Publication series

Name	Dundee Discussion Papers in Economics
Publisher	University of Dundee
No.	267
ISSN (Print)	1473-236X

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 13 Climate Action

Keywords

Climate policy
Extreme events
Real options
Levy process

Access to Document

DDPE_267

Cite this

@techreport{3c07ec0f829947ac9cf483e6b2acecac,

title = "Dundee Discussion Papers in Economics 267: Global warming and fat tailed-uncertainty: rethinking the timing and intensity of climate policy ",

abstract = "The possibility of low-probability extreme natural events has reignited the debate over the optimal intensity and timing of climate policy. In this paper, we contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real options model with {\textquotedblleft}tail risk{\textquotedblright}. In a nutshell, our results indicate the importance of tail risk and call for foresighted pre-emptive climate policies.",

keywords = "Climate policy, Extreme events, Real options, Levy process",

author = "Yu-Fu Chen and Michael Funke",

year = "2012",

month = jun,

language = "English",

series = "Dundee Discussion Papers in Economics",

publisher = "University of Dundee",

number = "267",

type = "WorkingPaper",

institution = "University of Dundee",

}

TY - UNPB

T1 - Dundee Discussion Papers in Economics 267

T2 - Global warming and fat tailed-uncertainty: rethinking the timing and intensity of climate policy

AU - Chen, Yu-Fu

AU - Funke, Michael

PY - 2012/6

Y1 - 2012/6

N2 - The possibility of low-probability extreme natural events has reignited the debate over the optimal intensity and timing of climate policy. In this paper, we contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real options model with “tail risk”. In a nutshell, our results indicate the importance of tail risk and call for foresighted pre-emptive climate policies.

AB - The possibility of low-probability extreme natural events has reignited the debate over the optimal intensity and timing of climate policy. In this paper, we contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real options model with “tail risk”. In a nutshell, our results indicate the importance of tail risk and call for foresighted pre-emptive climate policies.

KW - Climate policy

KW - Extreme events

KW - Real options

KW - Levy process

M3 - Discussion paper

T3 - Dundee Discussion Papers in Economics

BT - Dundee Discussion Papers in Economics 267

PB - University of Dundee

ER -

Dundee Discussion Papers in Economics 267: Global warming and fat tailed-uncertainty: rethinking the timing and intensity of climate policy

Abstract

Publication series

UN SDGs

Keywords

Access to Document

Fingerprint

Cite this