Essays on the macroeconomics of climate change

This dissertation consists of three chapters. The first chapter uses a consumption equivalent measure within an overlapping-generations setting to simulate the consumption loss or gain for different generations. The findings suggest that the costs associated with an emissions stabilization program are relatively large for current generations and the net benefit will arrive early 24th century. These results imply that intergenerational redistribution programs, such as government debt, cannot eliminate the costs associated with the stabilization program because the generations that benefit from the program do not overlap with the generations that incur the costs.; The second chapter extends the first chapter by including endogenous abatement activities. The model in is based on the product-expansion type of endogenous growth model. It incorporates a profit stimulated R&D with realistic market distortions to create an induced innovation structure. In this setting, a control policy has the dual role of discouraging emissions and triggering new abatement technologies. The results show that the omission of entrepreneurial response to a control policy result in overestimation of costs associated with this particular policy. Although induced innovation has a potential to reduce the compliance costs with the control policy, current and near-future generations will bear some net costs.; The first part the last chapter provides a review of the Purchasing Power Parity (PPP) theory. In the second part, three empirical applications are carried out using Turkish official and black market exchange rates for the period 1969.Q1–1999.Q3. The first empirical part of this study shows that conventional unit root tests may be misleading for the long run validity of PPP because they impose restrictions on the dynamic structure between the nominal exchange rate and price index. The second empirical part analyzes PPP within a trivariate cointegration analysis and concludes that the black market rate carries the burden of correcting deviations from the long run equilibrium. The last empirical part considers multiple trade partners and shows evidence for the validity of PPP.