Independent Research Projects
Virtual Carbon Currency : putting a price on carbon!
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Navigating Economic Policymaking Through the Lens of the Lucas Critique
The article discusses the economic impact of climate change and suggests using a "carbon fee and dividend" approach to tackle it. This approach involves charging a fee on carbon emissions and giving the collected money back to individuals or businesses. The article highlights challenges with current carbon pricing and proposes adjustments based on economic incentives. It also explores the idea of a virtual carbon currency, using blockchain technology. The conclusion emphasises the transformative potential of implementing a virtual carbon currency through the suggested approach.
This article explores the impact of the Lucas critique on economic policymaking, specifically challenging the traditional use of the Phillips curve. I argue that attempts to manipulate observed correlations through policy interventions lead to individuals adjusting expectations, rendering the relationship unstable. Examining historical examples, such as Sweden in the 1990s and Japan's "Abenomics," the article demonstrates the shift towards adaptive strategies, incorporating supply-side policies and multifaceted approaches to address unemployment. The Lucas critique, rather than rendering the Phillips curve irrelevant, encourages a dynamic and interconnected policy approach, liberating policymakers from static models and enabling them to navigate the evolving economic landscape more effectively.