Climate and the Economy

Course purpose: obtain an understanding for the interrelation between climate change and the global economy.

Examination: the final grade is determined based on small in-class exams (20%) and a final exam (80%).

Readings: The main reading is a set of lecture notes, along with excerpts from the IPCC report, Chad Jones's Introduction to Economic Growth, and Hal Varian's Microeconmic Analysis. Certain other readings may be added.

Contact information: Feel free to call or e-mail any of the professors any (reasonable) time. Office hours: by appointment.

Other information: The lectures will be given by John Hassler, Per Krusell, and Conny Olovsson and two more visiting lecturers, who are PhD students who are doing research on climate change and the economy. Their names are David von Below and Gustav Engström. The contact details of the professors can be found at http://www.iies.su.se

Lecure plan (each lecture is 2 hours)

  1. Overview and the natural science part (6 hrs): historical data on temperatures, basic emission flow chart, the carbon cycle, climate modeling, damages. JH,DvB, Johns notes, To read: ICCP FAQ, Dell, Jones and Olken
  2. Cont'd.
  3. Cont'd.
  4. Externalities in public economics (3 hrs): first welfare theorem, taxes vs. other instruments, free-riding, coordination issues across countries. CO
  5. a) Cont’d
    b) Growth theory and empirics (3 hrs): the Solow model, optimal growth, exogenous and endogenous technological change, the world income distribution. PK
  6. Growth theory and empirics, cont’d. (PK)
  7. Natural resource economics (3 hrs): the Hotelling rule, the Dasgupta-Heal model, technical change of various sorts, backstop technology. CO
  8. a) Natural resource economics, cont’d.
    b) Measuring damages (2 hrs): how it is done (micro vs. macro, contrast Kudamatsu, Persson, and Strömberg and Jones and Olken), what Nordhaus does. GE
  9. a) Measuring damages, cont’d
    b) A complete model (4 hrs): putting everything together in order to analyze policy and make forecasts. PK, JH
  10. A complete model, cont'd.
  11. Panel discussion: discussion of the Stern report and the media debate; what of relevance was not covered in the course and what is the aim of current and future research? (4 hrs).  PK, JH, CO, DvB. GE