Common Tragedies

Thoughts on Environmental Economics

Orszag sets the record straight

Posted by Rich Sweeney on March 6, 2008

I’m not entirely sure which record that is, but his post is informative nonetheless. Apparently responding to bloggers who misinterpreted the CBO’s recent CO2 policy options report, Orszag lays out the benefits of inter-temporal cap flexibility. This is an oft under-appreciated but potentially very valuable point (at least from an efficiency standpoint). In addition to smoothing out the costs of annual idiosyncrasies (in weather, politics, the economy, etc) as Orszag mentions, it seems to me that banking and borrowing would also provide potentially useful information about insiders’ expectations going forward. Do check out his comment.

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