Innovation, Endogenous Growth and Climate Change: Comments on Works of the 2018 Nobel Prize Winners in Economic Sciences

Abstract

Abstract:

The 2018 Nobel Prize in Economic Sciences was awarded to Professors William D. Nordhaus and Paul M. Romer for their outstanding contributions to climate change, technological innovation and endogenouseconomic growth research. Natural scarcity is one of core properties of economics, while knowledge and innovation are effective ways to break the bottleneck of resource scarcity. Two Nobel Prize winners in 2018 made great contributions to these areas by establishing interactional model of market economy, knowledge and natural resources. To be specific, the emphasis of Professor Nordhaus's research has long been placed on climate change economics. He was the first to lay down the economic analysis framework on climate change, and creatively built a dynamic integrated climate economic model (DICE), which has been broadly employed to manage social cost of carbon (SCC) and provide market-oriented strategies for tackling climate change. Professor Romer proposed the famous four-factor growth theory (i.e., physical capital, labor, human capital and knowledge), and developed an endogenous economic growth model by incorporating knowledge stock into economic production. His research heavily re-spurs the academic interests in economic growth, and in practice, promotes the making of plenty of regulations and policies associated with economic development. This work dedicates to reveal the contributions of Professors Nordhaus and Romer's works, summarizes the state-of-the-art lessons abstracted from their theories and applications, and indicates possible directions for future research and policy-making on knowledge creation, technological change and economic growth.

Key words: Nobel Prize in economic sciences, comments, climate change, technological innovation, endogenous economic growth

Duan Hongbo, Cai Zongwu. Innovation, Endogenous Growth and Climate Change: Comments on Works of the 2018 Nobel Prize Winners in Economic Sciences[J]. , 2018, 30(10): 3-13.

References

[1] 段宏波,朱磊,范英. 能源-环境-经济气候变化综合评估模型研究综述[J]. 系统工程学报, 2014,29(6):852-868
[2] 向国成,李宾,田银华. 威廉·诺德豪斯与气候变化经济学——潜在诺贝尔经济学奖得主学术贡献评介系列[J]. 经济学动态, 2011,(4):103-107
[3] IPCC. Climate Change:The IPCC Scientific Assessment[M]. New York:Cambridge University Press, 1990
[4] Wigley T., Raper S. Interpretation of High Projections for Global-Mean Warming[J]. Science, 2001,293(5529):451-454
[5] Cai Y. Y., Judd K. L., Lenton T. M., et al. Environmental Tipping Points Significantly Affect the Cost-Benefit Assessment of Climate Policies[J]. Proceedings of the National Academy of Sciences, 2015,112(15):4606-4611
[6] Nordhaus W. D. The Global Commons I:Costs and Climatic Effects, How Fast Should We Graze the Global Commons[J]. The American Economic Review:Papers & Proceedings, 1982,72(2):242-246
[7] Cline W. R. The Economics of Global Warming[M]. Washington D. C:Institute for International Economics, 1992
[8] Nordhaus W. D. Managing the Global Commons:The Economics of Climate Change[M]. Cambridge, MA:The MIT Press, 1994
[9] Fankhauser S. The Economic Costs of Global Warming[J]. Global Environmental Change, 1994,4(4):301-309
[10] Mendelsohn R., Neumann J. E. The Impact of Climate Change on the United States Economy[M]. Cambridge UK:Cambridge University Press, 1999
[11] IPCC. Climate Change 2014:Synthesis Report. Contribution of Working Groups I, Ⅱ and Ⅲ to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change[Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)] [R]. IPCC, Geneva, Switzerland, 2014
[12] Nordhaus W. D., Boyer J. Warming the World:Economic Models of Global Warming[M]. Cambridge, MA:The MIT Press, 2000
[13] Nordhaus W. D., Sztorc P. DICE 2013R:Introduction and Users' Manual[R]. Second Edition, Yale University, October, 2013
[14] Arrow K. J. A Difficulty in the Concept of Social Welfare[J]. Journal of Political Economy, 1950,58(4):328-346
[15] Nordhaus W. D., Yang Z. L. A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies[J]. The American Economic Review, 1996,86(4):741-765
[16] Nordhaus W. D. Economic Aspects of Global Warming in a Post-Copenhagen Environment[J]. Proceedings of the National Academy of Sciences, 2010,107(26):11721-11726
[17] Peck S. C., Teisberg T. J. CETA:A Model for Carbon Emission Trajectory Assessment[J]. The Energy Journal, 1992,13(1):55-77
[18] Burniaux J., Martin J., Nicoletti G., et al. GREEN-A Multi-Region Dynamic General Equilibrium Model for Quantifying the Costs of Curbing CO₂ Emissions:A Technical Manual[R]. OECD Economics Department Working Paper, No. 104. Paris:OECD Publishing, 1991
[19] Babiker M., Reilly J., Mayer M., et al. The MIT Emission Prediction and Policy Analysis (EPPA) Model:Revisions, Sensitivities, and Comparisons of Results[R]. MIT Joint Program on the Science and Policy of Global Change, Report No 71. Cambridge:MIT, 2001
[20] Manne A. S., Mendelsohn R., Richels R. G. MERGE:A Model for Evaluating Regional and Global Effects of GHG Reduction Policies[J]. Energy Policy, 1995,23(1):17-34
[21] Hope C., Anderson J., Wenman P. Policy Analysis of the Greenhouse Effect:An Application of the PAGE Model[J]. Energy Policy, 1993,21(3):327-338
[22] Bosetti V., Carraro C., Galeotti M., et al. WITCH:A World Induced Technical Change Hybrid Model[J]. The Energy Journal, 2006,27:13-37
[23] 段宏波. 能源-经济-环境系统建模与新能源技术扩散研究[D]. 中国科学院大学博士学位论文, 2013
[24] van der Zwaan B. C. C., Gerlagh R., Klaassen G., et al. Endogenous Technological Change in Climate Change Modeling[J]. Energy Economics, 2002,24:1-19
[25] Popp D. ENTICE:Endogenous Technological Change in the DICE Model of Global Warming[J]. Journal of Environmental Economics and Management, 2004,48:742-768
[26] Duan H. B., Fan Y., Zhu L. What's the Most Cost-Effective Policy of CO₂ Targeted Reduction:An Application of Aggregated Economic Technological Model with CCS?[J] Applied Energy, 2013,112:866-875
[27] Hu Z. L., Cao J., Hong L. J. Robust Simulation of Global Warming Policies Using the DICE Model[J]. Management Science, 2012,58(12):2190-2206
[28] Berger L., Emmerling J., Tavoni M. Managing Catastrophic Climate Risks under Model Uncertainty Aversion[J]. Management Science, 2016,63(3):587-900
[29] Lemoine D., Traeger C. P. Economics of Tipping the Climate Dominoes[J]. Nature Climate Change, 2016,6:514-519
[30] Gillingham K., Nordhaus W. D., Anthoff D., et al. Modeling Uncertainty in Integrated Assessment of Climate Change:A Multi-Model Comparison[J]. Journal of the Association of Environmental & Resource Economists, 2018,5(4):791-826
[31] Arrow K., Cropper M., Gollier C., et al. Determining Benefits and Costs for Future Generations[J]. Science, 2013,341(6144):349-350
[32] Solow R. M. Contribution to the Theory of Economic Growth[J]. The Quarterly Journal of Economics, 1956,70(1):65-94
[33] Romer P. M. Growth Based on Increasing Returns due to Specialization[J]. The American Economic Review:Papers and Proceedings, 1987,77(2):56-62
[34] Romer P. M. Increasing Returns and Long-Run Growth[J]. Journal of Political Economy, 1986,94(5):1002-1037
[35] Lucas R. E. On the Mechanics of Economic Development[J]. Journal of Monetary Economics, 1988,22(1):3-42
[36] Barro R. J. Economic Growth in A Cross Section of Countries[J]. The Quarterly Journal of Economics, 1991,106(2):407-443
[37] Grossman G. M., Helpman E. Trade, Knowledge Spillovers, and Growth[J]. European Economic Review, 1991,35(2-3):517-526
[38] Aghion P., Howitt P. A Model of Growth through Creative Destruction[J]. Econometrica, 1992,60(2):323-351
[39] Stokey N. L., Rebelo S. Growth Effects of Flat-Rate Taxes[J]. Journal of Political Economy, 1995,103(3):519-550
[40] Romer P. M. Endogenous Technological Change[J]. Journal of Political Economy, 1990,98(5):S71-S102
[41] Duan H. B., Zhu L., Fan Y. Modeling the Evolutionary Paths of Multiple Carbon-Free Energy Technologies with Policy Incentives[J]. Environmental Modeling & Assessment, 2015,20:55-69
[42] Popp D. ENTICE-BR:The Effects of Backstop Technology R&D on Climate Policy Models[J]. Energy Economics, 2006,28:188-222
[43] Duan H. B., Zhang G. P., Wang S. Y., et al. Robust Climate Research:A Review on Multi-Model Analysis[R]. Working Paper, University of Chinese Academy of Sciences, 2018
[44] Arrow K. J. The Economic Implications of Learning by Doing[J]. The Review of Economic Studies, 1962,29(3):155-173
[45] Kypreo S., Bahn O. A MERGE Model with Endogenous Technological Progress[J]. Environmental Modeling and Assessment, 2003,8:249-259
[46] Gillingham K., Newell R. G., Pizer W. A. Modeling Endogenous Technological Change for Climate Policy Analysis[J]. Energy Economics, 2008,30(6):2734-2753