Abstract: We consider the robust responses to environmental disasters in stochastic growth economies. The representative agent has imprecise knowledge about environmental disasters and exhibits ambiguity aversion to the jump arrival intensity. In the equilibrium, the optimal abatement expenditure is increasing in the level of ambiguity aversion, which overturns the effect of model uncertainty on capital investment. Because of mitigating future damages, the incremental abatement may enhance long-run economic growth. In addition, welfare gains from abatement technology and the social cost of carbon become more substantial under ambiguous circumstances. Finally, we extend the baseline model by considering emission stock and find the main results still hold in this extension.

Keywords: Environmental disasters；Ambiguity aversion； Abatement；Economic growth；Social cost of carbon

该文2024年4月发表于Environmental and Resource Economics第87期，该期刊为武汉大学经济与管理学院学术期刊分级方案B+级奖励期刊。

原文链接：https://link.springer.com/article/10.1007/s10640-024-00843-4