Abstract
Between 1950 and 2017, world average life expectancy increased from
below-50 to above-70, while the fertility rate dropped from 5 to about 2.5.
We develop and calibrate an analytic climate-economy model with overlapping
generations to study the effect of such demographic change on capital
markets and optimal climate policies. Our model replicates findings from
the OLG-demography literature, such as a rise in households’ savings, and
a declining rate of return to capital. We also find that demographic change
raises the social cost of carbon, at 2020, from 28 euro/tCO2 in a model that
abstracts from demography, to 94 euro/tCO2 in our calibrated model.
below-50 to above-70, while the fertility rate dropped from 5 to about 2.5.
We develop and calibrate an analytic climate-economy model with overlapping
generations to study the effect of such demographic change on capital
markets and optimal climate policies. Our model replicates findings from
the OLG-demography literature, such as a rise in households’ savings, and
a declining rate of return to capital. We also find that demographic change
raises the social cost of carbon, at 2020, from 28 euro/tCO2 in a model that
abstracts from demography, to 94 euro/tCO2 in our calibrated model.
| Original language | English |
|---|---|
| Publisher | CentER, Center for Economic Research |
| Number of pages | 46 |
| Volume | 2017-035 |
| Publication status | Published - 21 Sept 2017 |
Publication series
| Name | CentER Discussion Paper |
|---|---|
| Volume | 2017-035 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
-
SDG 8 Decent Work and Economic Growth -
SDG 11 Sustainable Cities and Communities -
SDG 13 Climate Action
Keywords
- climate change
- social cost of carbon
- environmental policy
- demographic trends
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