Since one of today’s major political issues is how we reduce carbon emissions and their impact on
both the climate and the economy, then this paper will examine ’how will the global economy be
affected by climate change’. To analyze the problem, a simple climate-Solow model is used, which
is the simplest Integrated Assessment Model (IAM). The paper will look at some of the main
criticism of the DICE model such as the value of damages and determining the discount rate. The
analysis shows why critics would like to value damages more, and the importance of a discount
rate on the decision of what climate policy initiatives are more profitable. In comparison to the
DICE model, the simple climate-Solow model gives an okay prediction and understanding of how
the global economy will be affected by climate change, and what impact climate policy initiatives
have.