Calendrier du 22 octobre 2018
GSIELM (Graduate Students International Economics and Labor Market) Lunch Seminar
Du 22/10/2018 de 13:00 à 14:00
Maison des Sciences Economiques, Salle S/19
TRESA Enxhi (Université Cergy-Pontoise)
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Régulation et Environnement
Du 22/10/2018 de 12:00 à 13:00
salle R1-13, campus Jourdan - 75014 Paris
DOUENNE Thomas ()
Disaster risks, disaster strikes and economic growth: the role of preferences
This paper studies the role of preferences on the link between disasters and growth. An endogenous growth model with disasters is presented in which one can derive closed-form solutions with nonexpected utility. The model distinguishes disaster risks and disaster strikes and highlights the numerous mechanisms through which they may affect growth. It is shown that separating aversion to risk from the elasticity of inter-temporal substitution bears critical qualitative implications that enable to better understand these mechanisms. In a calibration of the model, it is shown that for standard parameter values, the additional restriction imposed by the time-additive expected utility can also lead to substantial quantitative bias regarding optimal risk-mitigation policies and growth. The paper thus calls for a wider use of non-expected utility in the modeling of disasters, in particular with respect to environmental disasters and climate change.