Quantitative Sustainable Economics and Finance 
Time: 10.00 am
Date:27th of November 2025
Room 3001

Armon REZAI (Institute for Political Economy of Public Policy ) “Intergenerational welfare effects of emissions targets in small open economies”

Abstract : A small open economy model with overlapping generations, endogenous labour supply, government debt, and current account dynamics is formulated to analyse the effects of a cap on cumulative emissions on intergenerational welfare and macroeconomic outcomes. First, we contrast implementation of the cap via a constant carbon price with a Hotelling rule for the carbon price when revenue is fully rebated. Second, the potential role of government debt is analysed for these two policy options. Third, the importance of judicially rebating carbon tax revenue in the presence of a distortionary on labour income is analysed. In all cases, the effects on intergenerational welfare, employment, capital flight, and the current account are highlighted.

Joint work : Frederick Van Der Ploeg

Organizers:  Patricia Crifo, Emmanuel Gobet, Peter Tankov, Gauthier Vermandel, and Olivier David Zerbib

Sponsors:
CREST-CMAP