Working Paper: NBER ID: w19146
Authors: Rajnish Mehra
Abstract: This paper illustrates that evaluating alternate abatement polices that affect the growth path of an economy on the basis of their effects on asset valuation may not be welfare enhancing. We show that the class of abatement polices considered in the integrated assessment literature are robust with respect to the choice of a discount factor if lifetime consumption equivalents are used as a metric. We argue against a global welfare function in the presence of significant global household heterogeneity. While economic analysis is a useful tool for evaluating different policies for a homogenous class of households, inter household comparisons are an ethical issue.
Keywords: No keywords provided
JEL Codes: E44; E6; G00; G12; G31; H00; O1; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Abatement policies (Q52) | Future consumption (E21) |
| Abatement policies (Q52) | Asset prices (G19) |
| Future consumption (E21) | Asset valuation (G32) |
| Equilibrium interest rate (E43) | Asset valuation (G32) |
| Asset valuation (G32) | Welfare assessment (I38) |
| Growth rates (O49) | Discount rate (E43) |
| Discount rate (E43) | Welfare implications (D69) |
| Abatement policies (Q52) | Growth rates (O49) |