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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 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18546.

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Date of creation: Nov 2012
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Handle: RePEc:nbr:nberwo:18546

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References

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  1. Akos Valentinyi & Berthold Herrendorf, 2008. "Measuring Factor Income Shares at the Sectoral Level," IEHAS Discussion Papers, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences 0803, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  2. Douglas Gollin, 2012. "The Agricultural Productivity Gap in Developing Countries," 2012 Meeting Papers, Society for Economic Dynamics 510, Society for Economic Dynamics.
  3. 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, London School of Economics and Political Science, LSE Library 48936, London School of Economics and Political Science, LSE Library.
  4. Andres Rodriguez-Clare & Natalia Ramondo, 2007. "Trade, Multinational Production, and the Gains from Openness," 2007 Meeting Papers, Society for Economic Dynamics 819, Society for Economic Dynamics.
  5. Berthold Herrendorf & Ákos Valentinyi, 2012. "Which Sectors Make Poor Countries So Unproductive?," Journal of the European Economic Association, European Economic Association, European Economic Association, vol. 10(2), pages 323-341, 04.
  6. 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, OECD Publishing 412, OECD Publishing.
  7. 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, International Food Policy Research Institute (IFPRI) 21, International Food Policy Research Institute (IFPRI).
  8. 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.
  9. Diego A. Comin & Mikhail Dmitriev & Esteban Rossi-Hansberg, 2012. "The Spatial Diffusion of Technology," NBER Working Papers 18534, National Bureau of Economic Research, Inc.
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Cited by:
  1. Dascher, Kristof, 2013. "City Silhouette, World Climate," MPRA Paper 48375, University Library of Munich, Germany.
  2. 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.
  3. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth, Elsevier, in: Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779 Elsevier.
  4. William Brock & Anastasios Xepapadeas & Athanasios Yannacopoulos, 2014. "Optimal Control in Space and Time and the Management of Environmental Resources," DEOS Working Papers, Athens University of Economics and Business 1402, Athens University of Economics and Business.
  5. 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.
  6. 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, Elsevier, vol. 37(12), pages 2371-2396.

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