A meta-analysis of the economic impacts of climate change policy in the United States
This paper provides a meta-analysis of a broad set of recent studies of the economic impacts of climate change mitigation policies. It evaluates the influences of the impacts of causal factors, key economic assumptions and macroeconomic linkages on the outcome of these studies. A quantile regression analysis is also performed on the meta sample, to evaluate the robustness of those key factors throughout the full range of macro findings. Results of these analyses suggest that study results are strongly driven by data inputs, economic assumptions and modeling approaches. However, they are sometimes affected in counterintuitive ways.
The macroeconomic impacts of climate change mitigation policies are controversial among both scholars and the policy-making community. Results range from predictions of severe economic harm to significant overall economic gains. Given the unresolved nature of this debate, this paper seeks to shed light on it by evaluating a wide range of macroeconomic studies through a meta-analytic approach. Meta-analysis is a method for evaluating a cross-section of studies on a given topic, and evaluating the impacts of assumptions, input variables and modeling approaches on the overall findings of the studies. In essence, meta-analysis is a study of studies (Borenstein et al., 2009; Lipsey and Wilson, 2001).
The purpose of this paper is to refine techniques to evaluate the relative influence of assumptions, input variables and macroeconomic linkages on a wide range of macroeconomic studies of climate change policy. Repetto and Austin (1997), Barker et al. (2002), and Barker and Jenkins (2007) have recently performed meta-analyses to evaluate several macroeconomic studies in this area. This paper expands upon that foundation by evaluating a broader set of studies (both national and sub-national) and using a broader set of techniques (including quantile regression).
Section 2 of this paper provides a discussion of the key assumptions, causal factors and modeling approaches that influence macroeconomic findings. The following three sections include the standards of any empirical paper, detailing the data, methods and results of the meta-analysis. Section 6 develops the meta-analysis further, through the use quantile regression analysis, which is particularly helpful in explaining the effect of those economic assumptions on subsets of the meta sample. Section 7 focuses on two key studies, and elaborates on how the modeling methodologies, data and economic assumptions drive their results. Section 8 summarizes the contributions of the paper.
2. FACTORS AFFECTING MACROECONOMIC IMPACTS
The economy of a state, region, or nation is a complex mega-institution. It consists of the interactions of millions of individual consumers and businesses, primarily through the workings of markets. The macroeconomic linkages work not only through markets for goods and services, but also through factors of production (labor, capital, and land and other natural resources). Even the macroeconomy of a small state is likely to involve over a million businesses because of cross-border trade.
For many years, macroeconomics was dominated by considerations of aggregate components, such as production, consumption, investment, export/imports and government spending. Over the years, there has been a growing appreciation of two considerations: 1) major differences...
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