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Capital beats coal: How collecting the climate rent increases aggregate investment

Abstract:

Carbon pricing is the key to decarbonizing the economy, as it regulates emission flows. However, a price on carbon also collects rents from underlying fossil resource stocks, giving rise to unexamined macroeconomic effects. This article shows that if these stocks are tradable, carbon pricing shifts aggregate investment towards alternative assets. If capital is underaccumulated, this implies lower costs of climate policy and a welfare improvement. We prove this beneficial investment shift from...

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Publication status:
Published
Peer review status:
Peer reviewed
Version:
Accepted Manuscript

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Publisher copy:
10.1016/j.jeem.2017.12.006

Authors


Siegmeier, J More by this author
More by this author
Institution:
University of Oxford
Division:
Social Sciences Division
Department:
SOGE, Environmental Change Institute
Edenhofer, O More by this author
Publisher:
Elsevier Publisher's website
Journal:
Journal of Environmental Economics and Management Journal website
Volume:
88
Pages:
366-378
Publication date:
2017-12-27
Acceptance date:
2017-10-30
DOI:
ISSN:
0095-0696
Pubs id:
pubs:809749
URN:
uri:f666a150-050d-4823-999c-2266f3fc3a19
UUID:
uuid:f666a150-050d-4823-999c-2266f3fc3a19
Local pid:
pubs:809749

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