Trading-off generations: Equity, discounting, and climate change

Maik Schneider, Christian Traeger, Ralph Winkler

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The prevailing literature discusses intergenerational trade-offs in climate change predominantly in terms of the Ramsey equation relying on the infinitely lived agent model. We discuss these trade-offs in a continuous time OLG framework and relate our results to the infinitely lived agent setting. We identify three shortcomings of the latter: first, underlying normative assumptions about social preferences cannot be deduced unambiguously. Second, the distribution among generations living at the same time cannot be captured. Third, the optimal solution may not be implementable in overlapping generations market economies.
Original languageEnglish
Pages (from-to)1621-1644
Number of pages24
JournalEuropean Economic Review
Issue number8
Early online date5 Sept 2012
Publication statusPublished - 1 Nov 2012


  • Climate change
  • Discounting
  • Intergenerational Equity
  • Overlapping Generations
  • Time preference

ASJC Scopus subject areas

  • Economics and Econometrics


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