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A recursive method for solving a climate-economy model: value function iterations with logarithmic approximations

Hwang, In Chang (2014): A recursive method for solving a climate-economy model: value function iterations with logarithmic approximations.

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Abstract

A recursive method for solving an integrated assessment model of climate and the economy is developed in this paper. The method approximates value function with a logarithmic basis function and searches for solutions on a set satisfying optimality conditions. These features make the method suitable for a highly nonlinear model with many state variables and various constraints, as usual in a climate-economy model.

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