Optimal Climate Policy in a Global Economy

Optimal Climate Policy in a Global Economy

Anastasios Karantounias (Surrey University)

Abstract

This paper studies the optimal climate policy in a global economy. Emissions impose a dynamic, global, negative externality, raising natural questions about international policy coordination. To understand the issues involved, I first build a simple dynamic multi-country model and study the optimal cooperative climate policy that corrects the global externality. Moreover, I move beyond cooperation and study the optimal climate policy for a large country, that faces a passive rest of the world. In such a setup, incentives for corrective taxation are intertwined with interest rate manipulation. Implications for optimal carbon taxes and capital controls are drawn.

About the speaker

Anastasios Karantounias is an Associate Professor  in the School of Economics at the University of Surrey.

He is an Academic Visitor at  the Bank of England, an Associate of the  Centre for Macroeconomics (LSE branch), a Fellow of the Institute for Sustainability at the University of Surrey, and a member of the Macro Finance Society.

His major field of study is macroeconomics with a particular emphasis on optimal fiscal and monetary policy, macro-finance, ambiguity,  imperfect information and optimal carbon taxation.

Prior to  joining the School, Dr. Karantounias worked as  a research economist in the Research Department of the Federal Reserve Bank of Atlanta. Before that, he was a research and teaching assistant at New York University. He also worked as a research intern at the Research and Statistics Division of the Federal Reserve's Board of Governors and the Monetary Policy Strategy Division of the European Central Bank.