by Kathryn Smith
- Dasgupta and Weitzman have shown that the saving rates implied by the Stern Review’s values for the rate of pure time preference and the elasticity of the marginal utility of consumption are too high from either a normative (Dasgupta) or descriptive (Weitzman) perspective. This paper provides the first detailed investigation of the implications of Stern’s parameter choices for saving, firstly in standard neoclassical growth theory and then in a widely used climate policy model based on that theory, Nordhaus’s Dynamic Integrated model of Climate and the Economy (DICE).
Smith, K. (2009). "Saving the World but Saving Too Much? Pure Time Preference and Saving Rates in Integrated Assessment Modelling." Crawford School of Economics and Government, The Australian National University, Research Report No. 39, Oct 2009.
