Cost Benefit Analysis for Evaluation of Climate Stabilization Policy by Dynamic Optimal Macroeconomic Model

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This study evaluates climate stabilization alternatives theoretically and empirically from view points of cost-benefit analysis by using dynamic optimal macroeconomic model. Results of theoretical analyses show that equivalent variation (EV) by those alternatives can be divided into public-welfare effect that evaluates changes in utility in monetary term, income-change effect by changes in output and emissions trading income, and changes in investment that means social cost. On the other hand, empirical results show that strict climate stabilization alternatives decrease EV in all regions without impacts of climate change on utility, while those alternatives increase and decrease EV in each region and public-welfare effects are found with that.