Prof. Robert Pindyck of MIT Sloan will present a seminar based on his recent paper. Abstract: Focusing on tail e?ects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. I estimate the fraction of consumption w*(τ) that society would be willing to sacri?ce to ensure that any increase in temperature at a future point is limited to τ. Using information on the distributions for temperature change and economic impact from studies assembled by the IPCC and from "integrated assessment models" (IAMs), I ?t displaced gamma distributions for these variables. Unlike existing IAMs, I model economic impact as a relationship between temperature change and the growth rate of GDP as opposed to its level, so that warming has a permanent impact on future GDP. The ?tted distributions for temperature change and economic impact generally yield values of w*(τ) below 2%, even for small values of τ, unless one assumes extreme parameter values and/or substantial shifts in the temperature distribution. These results are consistent with moderate abatement policies.