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Publications Oct 2015

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A Third Wave in the Economics of Climate Change


This paper assesses the main shortcomings of two generations of climate-energy-economic models and proposes that a new wave of models need to be developed to tackle these four challenges. This paper then examines two potential candidate approaches—dynamic stochastic general equilibrium (DSGE) models and agent-based models (ABM). The successful use of agent-based models in other areas, such as in modelling the financial system, housing markets and technological progress suggests its potential applicability to better modelling the economics of climate change.


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Alexander Teytelboym
Cameron Hepburn
Doyne Farmer
Penny Mealy

Type: Journal Articles & Working Papers