Short communication: Sensitivity analysis of an integrated climate-economic model

DOI10.1137/21M1404120MaRDI QIDQ4958387zbMATH OpenOpenAlexWikidataFDO

Authors Benjamin M. Bolker, M. R. Grasselli, Emma Holmes

Publication date 8 September 2021

Published in SIAM Journal on Financial Mathematics (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/2103.06227

zbMATH Keywords

climate changeecological economicsintegrated assessment modelsstock-flow consistent models

Mathematics Subject Classification ID

Economic dynamics (91B55) Environmental economics (natural resource models, harvesting, pollution, etc.) (91B76)

Abstract: We conduct a sensitivity analysis of a new type of integrated climate-economic model recently proposed in the literature, where the core economic component is based on the Goodwin-Keen dynamics instead of a neoclassical growth model. Because these models can exhibit much richer behaviour, including multiple equilibria, runaway trajectories and unbounded oscillations, it is crucial to determine how sensitive they are to changes in underlying parameters. We focus on four economic parameters (markup rate, speed of price adjustments, coefficient of money illusion, growth rate of productivity) and two climate parameters (size of upper ocean reservoir, equilibrium climate sensitivity) and show how their relative effects on the outcomes of the model can be quantified by methods that can be applied to an arbitrary number of parameters.

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Cites work

• An analysis of the Keen model for credit expansion, asset price bubbles and financial fragility
• Testing a Goodwin model with general capital accumulation rate

Cited in

(5)

• Econometric estimates of Earth's transient climate sensitivity
• Analyzing and visualizing the synergistic impact mechanisms of climate change related costs
• A Simple Endogenous Model of Economic Activity and Climate Change
• A copula-based data augmentation strategy for the sensitivity analysis of extreme operational losses
• A tale of two regions: a north and south macroeconomic-ecological model

Describes a project that uses

Uses Software

• deSolve
• qrng
• diffEq

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