Advanced Environmental Macroeconomics

This course, shared between Gauthier Vermandel (Ecole Polytechnique) and Garth Heutel (Georgia State University and NBER), focuses on understanding the economic policies and models crucial for transitioning to net zero emissions. The course is divided into five lectures, blending theoretical insights with practical applications.

Materials

Slides 1 : An Introduction to Environmental Macroeconomics

Objectives of the Lecture:

Understanding the mechanism between human activities and global warming;
Defining the concept of mitigation versus adaptation.
Getting the core mechanism of green transition;

Materials:

Slides_intro.pdf Slides

Problem set: Optimal carbon pricing in static and dynamic economies

Objectives of the Lecture:

Demonstrating how an externality breaks the 2nd welfare theorem;
How carbon tax can improve allocation;

Materials:

problem_set.pdf Problem Set

Slides: DICE in Dynare

Objectives of the Lecture:

Mastering the main assumptions of DICE;
Solving DICE in Dynare;
Using symbolic toolbox to get the social cost of carbon;

Materials:

Slides_DICE.pdf Slides DICE

MPC DICE A nice summary of DICE (calibration and equations)

Dynare_DICE.zip DICE solved in Dynare

Additional materials:

Evolution of Assessments of the Economics of Global Warming: Changes in the DICE model, Nordhaus (2017) NBER WP. (published in Climatic change, 2018 – Springer)
Climate Change: The Ultimate Challenge for Economics, Nordhaus (2019). American Economic Review.
Policies, Projections, and the Social Cost of Carbon: Results from the DICE-2023 Model, Barrage & Nordhaus (2023). NBER WP.
Climate Change Policy: What Do the Models Tell Us?, Pindick (2013). NBER WP (published in Journal of Economic Literature).
The Use and Misuse of Models for Climate Policy, Pindick (2017). Review of Environmental Economics and Policy.

The Dynare Package

How to set up Dynare
1/ Download link. (For those of you using citrix, I suggest you to use an older version of dynare because of hard drive limitation, install on H:/ drive.)
2/ Load automatically Dynare.
3/ Call dynare by typing in the command window of MATLAB “dynare NAME_OF_YOUR_DYNARE_FILE”.

Get MATLAB on your computer

Two possibibilities
Please use your own laptop if you can with MATLAB installed prior to the first lecture.
1/ Installing: Dauphine University provides a free licence for students. Please have Datafeed, Optimization and Econometrics toolboxes installed. This is the safest solution
2/ Citrix: Go to Citrix to connect to a remote server hosted in Dauphine. Note that your internet connection must be stable, which may not always be the case if many users are simultaneously connected to the wifi.