FEEM working papers "Note di lavoro" series
2011 .095

The Environment and Directed Technical Change: Comment


Authors: Jean-Charles Hourcade, Antonin Pottier, Etienne Espagne
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Keywords: Technological Change, Endogenous Growth, Climate, Energy Substitutability
JEL n.: O30,O33,Q43,Q54,Q56

Abstract

This paper discusses the growth model with environmental constraints recently presented in (Acemoglu et al., 2011) which focuses on the redirection of technical change by climate policies with research subsidies and a carbon tax. First, Acemoglu et al.'s model and chosen parameters yield numerical results that do not support the conclusion that ambitious climate policies can be conducted “without sacrificing (much or any) long-run growth”. Second, they select unrealistic key parameters for carbon sinks and elasticity of substitution. We find that more realistic parameters lead to very different results. Third, the model leads to an unrealistic conclusion when used to analyse endogenous growth, suggesting specification problems.

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