Thread by @MarkVinPaul

I'm rereading @GernotWagner & Martin Weitzman's excellent book Climate Shock. First, you should all ready it.

Second, I have a question about framing in enviro econ, and econ write large. They state: "Stronger climate policy now implies higher, immediate economic costs."

But what if this is wrong? What if stronger climate policy now implies higher, immediate economic GAINS. What if, an economy w/ insufficient aggregate demand, we could actually increase economic activity via stronger climate policy now?

The traditional story goes as follows:
1) Climate policy is hard.
2) There are many reasons for this, including FF power, but the most important is that it's simply too damn expensive.
3) Continue w/ small bore measures (or no measures at all) to combat emissions.

But what if our economic models are wrong, and the economy is NOT operating on all cylinders?

News alert: The economy almost never operates at full employment w/out major government intervention via fiscal policy.

Thus, if the economy is operating below full potential, the idea that "stronger climate policy now implies higher, immediate economic costs" has it backwards. 🤔

We delve into these issues, and more, in the attached report. rooseveltinstitute.org/wp-content/upl…

But please note, one of the most frequently evoked assumption of MOST enviro econ is often wrong. Crowding out of other investment in the economy by choosing to invest in the green future is not given.

@GernotWagner writ large*