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The basic RBC model predicts that given a temporary shock, output, consumption, investment,t, and labor, all rise above their long-term trends and formative deviation. Furthermore, since more investment means more capital is available, a short-lived shock may impact the future.
examines a model of climate change that is similar to the one used in the Stern Review but with a 3 percent social discount rate that slowly declines to 1 percent in 300 years rather than the 0.1 percent discount rate used in the Stern Review. In his model, the welfare of future generations is given less weight than the current generation's ...
The increase in the use of share capital by joint-stock companies, which devolves part of the costs of using capital in production on others. [ 13 ] Nevertheless, Marx thought the countervailing tendencies ultimately could not prevent the average rate of profit in industries from falling; the tendency was intrinsic to the capitalist mode of ...
The measure of the income tax base equal to the sum of consumption and change in net worth was first advocated by German legal scholar Georg von Schanz. [3] His concept was further developed by the American economists Robert M. Haig and Henry C. Simons in the 1920s and 1930s.
where E is the expectation operator, u is a known utility function (which applies both to consumption and to the terminal wealth, or bequest, W T), ε parameterizes the desired level of bequest, ρ is the subjective discount rate, and is a constant which expresses the investor's risk aversion: the higher the gamma, the more reluctance to own ...
The first benefit (or dividend) is the benefit or welfare gain resulting from a better environment and less pollution (caused by a Pigouvian tax imposed on the producer), and the second dividend or benefit is a more efficient tax system due to a reduction in the distortions of the revenue-raising tax system, which also produces an improvement ...
The growth accounting model is normally expressed in the form of the exponential growth function. As an abstract example consider an economy whose total output (GDP) grows at 3% per year. Over the same period its capital stock grows at 6% per year and its labor force by 1%.
The Dynamic Integrated Climate-Economy model, referred to as the DICE model or Dice model, is a neoclassical integrated assessment model developed by 2018 Nobel Laureate William Nordhaus that integrates in the neoclassical economics, carbon cycle, climate science, and estimated impacts allowing the weighing of subjectively guessed costs and subjectively guessed benefits of taking steps to slow ...