  This paper tests the feasibility and estimates the cost of climate control
through economic policies. It provides a toolbox for a statistical historical
assessment of a Stochastic Integrated Model of Climate and the Economy, and its
use in (possibly counterfactual) policy analysis. Recognizing that
stabilization requires supressing a trend, we use an integrated-cointegrated
Vector Autoregressive Model estimated using a newly compiled dataset ranging
between years A.D. 1000-2008, extending previous results on Control Theory in
nonstationary systems. We test statistically whether, and quantify to what
extent, carbon abatement policies can effectively stabilize or reduce global
temperatures. Our formal test of policy feasibility shows that carbon abatement
can have a significant long run impact and policies can render temperatures
stationary around a chosen long run mean. In a counterfactual empirical
illustration of the possibilities of our modeling strategy, we study a
retrospective policy aiming to keep global temperatures close to their 1900
historical level. Achieving this via carbon abatement may cost about 75% of the
observed 2008 level of world GDP, a cost equivalent to reverting to levels of
output historically observed in the mid 1960s. By contrast, investment in
carbon neutral technology could achieve the policy objective and be
self-sustainable as long as it costs less than 50% of 2008 global GDP and 75%
of consumption.
