In response to growing concerns about global warming and climate change, numerous energy scenario or CGE models have been developed worldwide to provide alerts, mitigation, adaptation, financial and sustainability policy options (IPCC, 2010; UNFCCC, 2010). In the case of Korea, limited work on national action plans and mitigation policies has also been reported (Oh, 2008; Yoo, 2008). However, rigorous economic analysis of the trade-off between CO2 emissions and economic growth for credible climate change policies is still limited globally (Stern, 2004; Ruijven et al., 2008). To improve analysis, debate and policies in this field with Korea as a special case-study, the paper develops a new top down endogenous growth-CO2 multi-equation model with an endogenous environmental Kuznets curve to provide robust empirical findings on the trade-off and subsequent credible responses and compensation policies. The outcomes are useful to global warming researchers, climate change negotiators, and national policy-makers.
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