An economy-climate model with growing capital depreciation rate

Economic & mathematical methods and models

An Integrated Assessment model for the domain of economics of climate change based on the AK-model of economic growth with the capital depreciation rate increasing in the course of global warming is developed. It is shown that in the framework of the proposed model the output of the economy, temperature and carbon dioxide atmospheric concentration grow infinitely in absence of the negative feedback, while inclusion of this feedback into the model sets up “limits to growth” and causes the convergence of the dynamic system to equilibrium. The equilibrium state and transitional dynamics are studied.