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CANCELLED -Guillaume Chevillon (ESSEC)”WHAT DOES IT TAKE TO CONTROL GLOBAL TEMPERATURES? PROSPECTIVE AND COUNTERFACTUAL CARBON ABATEMENT POLICIES IN A COINTEGRATED VECTOR AUTOREGRESSIVE MODEL”
Finance & Financial Econometrics :
Time: 11.30 am
Date: 23th of March 2023
Guillaume Chevillon (ESSEC)”WHAT DOES IT TAKE TO CONTROL GLOBAL TEMPERATURES? PROSPECTIVE AND COUNTERFACTUAL CARBON ABATEMENT POLICIES IN A COINTEGRATED VECTOR AUTOREGRESSIVE MODEL”
Abstract :This paper performs an empirical historical analysis of a Stochastic Integrated Model of Climate and the Economy cast into an integrated-cointegrated Vector Autoregressive Model and estimated over years A.D. 800-2001. Extending previous results on Control Theory in nonstationary systems, we ask whether and quantify to what extent carbon abatement poli cies can effectively reduce global temperatures, using atmospheric carbon concentrations as an intermediate policy target. Using an extended dataset predating the industrial revolution, we also show how our econometric model for policy analysis can be used for counterfactual analyses. Our policy feasibility test shows that carbon abatement can have a significant long run impact and policies can render temperatures stationary around a chosen long run mean. Provisional results show that the counterfactual cost of carbon abatement for a retrospective policy aiming to keep global temperatures close to their 1900 historical level is about 40% of the observed 2010 level of world GDP, a cost equivalent to reverting to levels of output historically observed in the early 1990s.
Joint work : Takamitsu Kurita (Kyoto Sangyo University)
Jean-Michel ZAKOIAN (CREST)