Approximately optimal forest rotation in a nonstationary environment

Gars, J. and D. Spiro. 2023. Approximately optimal forest rotation in a nonstationary environment. Natural Resource Modeling e12372.

The problem of optimal forest rotation in a nonstationary environment can, in general, not be solved analytically. Even qualitatively characterizing how the solution changes over time is only possible in some special cases. In this paper, we consider an approximation of the true solution to the nonstationary problem. We derive an approximate harvesting rule by solving a sequence of stationary problems that assume the growth...

The black paradox

Hart, R. and J. Gars. 2022. The black paradox. European Economic Review 148:104211.

We model competition between an oil monopolist and competitive suppliers of coal and renewable energy in a dynamic general equilibrium framework. We show that market power— which disrupts the order of extraction—may lead to higher long-run emissions by encouraging early extraction of dirty fuels such as coal which would otherwise remain in the ground permanently; simply banning coal burning may be better than Pigovian taxation....

The effect of European fuel-tax cuts on the oil income of Russia

Gars, J., D. Spiro, and H. Wachtmeister. 2022. The effect of European fuel-tax cuts on the oil income of Russia. Nature Energy 7(10):912-913.

European fuel tax cuts will lead to significant income transfers to Russia, thus undermining the Union’s sanction efforts against the country. EU politicians should instead consider alternative policies, such as direct income transfers to households, if they want to shield citizens from increased fuel prices without benefiting Russia.

What Policies Address Both the Coronavirus Crisis and the Climate Crisis?

Engström, G. J. Gars, N. Jaakkola, T. Lindahl, D. Spiro and A. van Benthem. 2020. What Policies Address Both the Coronavirus Crisis and the Climate Crisis?. Environmental and Resource Economics volume 76:789–810.

The coronavirus pandemic has led many countries to initiate unprecedented economic recovery packages. Policymakers tackling the coronavirus crisis have also been encouraged to prioritize policies which help mitigate a second, looming crisis: climate change. We identify and analyze policies that combat both the coronavirus crisis and the climate crisis. We analyze both the long-run climate impacts from coronavirus-related economic recovery policies, and the impacts of...

Carbon pricing and planetary boundaries

Engström G., J. Gars, C. K. Krishnamurthy, D. Spiro, R. Calel, T. Lindahl and B. Narayanan. 2020. Carbon pricing and planetary boundaries. Nature Communications 11(4688).

Human activities are threatening to push the Earth system beyond its planetary boundaries, risking catastrophic and irreversible global environmental change. Action is urgently needed, yet well-intentioned policies designed to reduce pressure on a single boundary can lead, through economic linkages, to aggravation of other pressures. In particular, the potential policy spillovers from an increase in the global carbon price onto other critical Earth system processes...

What policies address both the coronavirus crisis and the climate crisis?

Engström, G. J. Gars, N. Jaakkola, T. Lindahl, D. Spiro and A. van Benthem. 2020. Beijer Discussion Paper 271: What policies address both the coronavirus crisis and the climate crisis?. Beijer Discussion Paper Series.

The coronavirus pandemic has led many countries to initiate unprecedented economic recovery packages. There have been widespread calls to prioritize dealing with a second, looming crisis—climate change—when designing these economic stimulus packages. In this paper we identify policies that promote both goals simultaneously. We analyze both the long-run climate impacts from coronavirus-related economic recovery policies, and the impacts of long-run climate policies on economic recovery...

Measuring the impact of agricultural production shocks on international trade flows

Ferguson, S.M., and J. Gars. 2019. Measuring the impact of agricultural production shocks on international trade flows . European Review of Agricultural Economics https://doi.org/10.1093/erae/jbz013.

The purpose of this study is to measure the sensitivity of traded quantities and trade unit values to agricultural production shocks. We develop a general equilibrium model of trade in which production shocks in exporting countries affect both traded quantities and trade unit values. The model includes per-unit trade costs and develops a methodology to quantify their size exploiting the trade unit value data. Using...

Fuel for economic growth?

Gars. J. and C. Olovsson. 2019. Fuel for economic growth?. Journal of Economic Theory 184:104941.

Using data for 134 countries, we document that countries deriving a larger share of their energy from fossil fuel are richer and grow faster. We then set up an endogenous growth model where final output is produced with a non-energy and two substitutable energy intermediate goods: fossil fuel and biofuel. With non-energy and energy goods being gross complements, and with higher costs for improving the...

The Unintended Consequences of a Global Carbon Tax

Engström., G, J. Gars, C.K.. Krishnamurthy, R. Calel, T. Lindahl, B.G. Narayanan, and D. Spiro. 2018. Beijer Discussion Paper 261: The Unintended Consequences of a Global Carbon Tax. Beijer Discussion Paper Series.

Climatic tipping points and optimal fossil fuel use

Engström, G., and J. Gars. 2016. Climatic tipping points and optimal fossil fuel use. Environmental and Resource Economics 65(3): 541-571.

The economics of climate change is characterized by many uncertainties regarding, for instance, climate dynamics, economic damages and potentially irreversible climate catastrophes. Using an optimal growth model of a fossil-fuel-driven economy subject to cli- mate externalities and potentially irreversible climatic regime shifts, this paper contributes to the understanding of how the risk of such events impacts on optimal fossil-fuel use, carbon taxes and fossil-fuel prices...