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On the Spatial Economic Impact of Global Warming

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  • Klaus DESMET
  • Esteban ROSSI-HANSBERG

Abstract

We propose a dynamic spatial theory to analyze the geographic impact of climate change. Agricultural and manufacturing firms locate on a hemisphere. Trade across locations is costly; firms innovate; and technology diffuses over space. Energy used in production leads to emissions that contribute to the global stock of carbon in the atmosphere, which affects temperature. The rise in temperature differs across latitudes, and its effect on productivity also varies across sectors. We calibrate the model to analyze how climate change affects the spatial distribution of economic activity, trade, migration, growth, and welfare. We assess quantitatively the impact of migration and trade restrictions, energy taxes, and innovation subsidies.

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Bibliographic Info

Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 13057.

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Length: 55 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:eti:dpaper:13057

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  1. Nelson, Gerald C. & Rosegrant, Mark W. & Koo, Jawoo & Robertson, Richard & Sulser, Timothy & Zhu, Tingju & Ringler, Claudia & Msangi, Siwa & Palazzo, Amanda & Batka, Miroslav & Magalhaes, Marilia & Va, 2009. "Climate change: Impact on agriculture and costs of adaptation," Food policy reports 21, International Food Policy Research Institute (IFPRI).
  2. Andres Rodriguez-Clare & Natalia Ramondo, 2007. "Trade, Multinational Production, and the Gains from Openness," 2007 Meeting Papers 819, Society for Economic Dynamics.
  3. Douglas Gollin & David Lagakos & Michael E. Waugh, 2011. "The Agricultural Productivity Gap in Developing Countries," Working Papers 11-14, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. Robert C. Feenstra & Robert E. Lipsey & Haiyan Deng & Alyson C. Ma & Hengyong Mo, 2005. "World Trade Flows: 1962-2000," NBER Working Papers 11040, National Bureau of Economic Research, Inc.
  5. Diego A. Comin & Mikhail Dmitriev & Esteban Rossi-Hansberg, 2012. "The Spatial Diffusion of Technology," NBER Working Papers 18534, National Bureau of Economic Research, Inc.
  6. Philippe Aghion & Antoine Dechezlepretre & David Hemous & Ralf Martin & John Van Reenen, 2012. "Carbon taxes, path dependency and directed technical change: evidence from the auto industry," LSE Research Online Documents on Economics 48936, London School of Economics and Political Science, LSE Library.
  7. Berthold Herrendorf & Ákos Valentinyi, 2012. "Which Sectors Make Poor Countries So Unproductive?," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 323-341, 04.
  8. Anne-Marie Brook & Robert W.R. Price & Douglas Sutherland & Niels Westerlund & Christophe André, 2004. "Oil Price Developments: Drivers, Economic Consequences and Policy Responses," OECD Economics Department Working Papers 412, OECD Publishing.
  9. Akos Valentinyi & Berthold Herrendorf, 2008. "Measuring Factor Income Shares at the Sectoral Level," IEHAS Discussion Papers 0803, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
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Cited by:
  1. Breinlich, Holger & Ottaviano, Gianmarco & Temple, Jonathan, 2013. "Regional Growth and Regional Decline," CEPR Discussion Papers 9568, C.E.P.R. Discussion Papers.
  2. Dascher, Kristof, 2013. "City Silhouette, World Climate," MPRA Paper 48375, University Library of Munich, Germany.
  3. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2013. "What Do We Learn from the Weather? The New Climate-Economy Literature," NBER Working Papers 19578, National Bureau of Economic Research, Inc.
  4. Brock, William A. & Engström, Gustav & Grass, Dieter & Xepapadeas, Anastasios, 2013. "Energy balance climate models and general equilibrium optimal mitigation policies," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2371-2396.
  5. William Brock & Anastasios Xepapadeas & Athanasios Yannacopoulos, 2014. "Optimal Control in Space and Time and the Management of Environmental Resources," DEOS Working Papers 1402, Athens University of Economics and Business.
  6. Devin Bunten & Matthew E. Kahn, 2014. "The Impact of Emerging Climate Risks on Urban Real Estate Price Dynamics," NBER Working Papers 20018, National Bureau of Economic Research, Inc.

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