Effects of Unilateral Climate Policy on Terms of Trade, Capital Accumulation, and Welfare in a World Economy
We present a two-good, two-country overlapping generations model where emissions arise from production and each country has a domestic emission permit system. When one country unilaterally reduces her cap on emissions, her output available for domestic and foreign consumption diminishes more than in the other country. With unchanged consumption expenditure shares for both goods the terms of trade improve, while capital stocks decline in the reducing and less strongly in the non-reducing country. The net welfare effect of improving terms of trade and falling capital stocks is negative in both countries. However, if the country which unilaterally reduces her emission permits is a net creditor to the world economy, her own welfare loss remains below that of the non-reducing country.
|Date of creation:||2008|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carolyn Fischer & Alan K. Fox, 2007. "Output-Based Allocation of Emissions Permits for Mitigating Tax and Trade Interactions," Land Economics, University of Wisconsin Press, vol. 83(4), pages 575-599.
- Brian R. Copeland & M. Scott Taylor, 2000.
"Free Trade and Global Warming: A Trade Theory View of the Kyoto Protocol,"
NBER Working Papers
7657, National Bureau of Economic Research, Inc.
- Copeland, Brian R. & Taylor, M. Scott, 2005. "Free trade and global warming: a trade theory view of the Kyoto protocol," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 205-234, March.
- Copeland,B.R. & Taylor,M.S., 2000. "Free trade and global warming : a trade theory view of the Kyoto protocol," Working papers 4, Wisconsin Madison - Social Systems.
- Tetsuo Ono, 2002.
"The Effects of Emission Permits on Growth and the Environment,"
Environmental & Resource Economics,
Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 75-87, January.
- Ono, Tetsuo, 2001. "The Effects of Emission Permits on Growth and the Environment," Discussion Paper 33, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
- Christoph Böhringer & Thomas Rutherford, 2002. "Carbon Abatement and International Spillovers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(3), pages 391-417, July.
- van Asselt, Harro & Biermann, Frank, 2007. "European emissions trading and the international competitiveness of energy-intensive industries: a legal and political evaluation of possible supporting measures," Energy Policy, Elsevier, vol. 35(1), pages 497-506, January.
- Jouvet, Pierre-André & Michel, Philippe & Rotillon, Gilles, 2005.
"Equilibrium with a market of permits,"
Research in Economics,
Elsevier, vol. 59(2), pages 148-163, June.
- Jouvet, Pierre-Andre & Michel, Philippe & Rotillon, Gilles, 2005.
"Optimal growth with pollution: how to use pollution permits?,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 29(9), pages 1597-1609, September.
- Pierre-André Jouvet & Philippe Michel & Gilles Rotillon, 2004. "Optimal growth with pollution : how to use pollution permits ?," Cahiers de la Maison des Sciences Economiques v04012, Université Panthéon-Sorbonne (Paris 1).
- Hoel, M., 1989.
"Global Environmental Problems: The Effects Of Unilateral Actions Taken By One Country,"
11/1989, Oslo University, Department of Economics.
- Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
- Onno Kuik & Reyer Gerlagh, 2003. "Trade Liberalization and Carbon Leakage," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 97-120.
- Stef Proost & Denise Van Regemorter, 2004.
"Climate Change Policy in European Countries and its effects on industry,"
Mitigation and Adaptation Strategies for Global Change,
Springer, vol. 9(4), pages 453-473, October.
- Stef Proost & Denise Van Regemorter, 2003. "Climate change policy in European countries and its effects on industry," Energy, Transport and Environment Working Papers Series ete0305, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
- Bréchet, Thierry & Lambrecht, Stéphane & Prieur, Fabien, 2009.
"Intertemporal transfers of emission quotas in climate policies,"
Elsevier, vol. 26(1), pages 126-134, January.
- BRECHET, Thierry & LAMBRECHT, Stéphane & PRIEUR, Fabien, . "Intertemporal transfers of emission quotas in climate policies," CORE Discussion Papers RP 2126, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Grubb, M. & Neuhoff, K., 2006.
"Allocation and competitiveness in the EU emissions trading scheme: policy overview,"
Cambridge Working Papers in Economics
0645, Faculty of Economics, University of Cambridge.
- Michael Grubb & Karsten Neuhoff, 2006. "Allocation and competitiveness in the EU emissions trading scheme: policy overview," Climate Policy, Taylor & Francis Journals, vol. 6(1), pages 7-30, January.
- Frank Convery, 2009. "Origins and Development of the EU ETS," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 391-412, July.
- Kant, Chander, 2005. "Capital mobility among advanced countries," Journal of Policy Modeling, Elsevier, vol. 27(9), pages 1067-1081, December.
- Frenkel, Jacob A & Razin, Assaf, 1986.
"The International Transmission and Effects of Fiscal Policies,"
American Economic Review,
American Economic Association, vol. 76(2), pages 330-35, May.
- Jacob A. Frenkel & Assaf Razin, 1986. "The International Transmission and Effects of Fiscal Policies," NBER Working Papers 1799, National Bureau of Economic Research, Inc.
- Yoshiyasu Ono & Akihisa Shibata, 2005. "Fiscal Spending, Relative-Price Dynamics, and Welfare in a World Economy," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 216-236, 05.
- Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
- Zhiqi Chen, 1992. "Long-Run Equilibria in a Dynamic Heckscher-Ohlin Model," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 923-43, November.
- Ghosh, Atish R., 1992. "Fiscal policy, the terms of trade, and the external balance," Journal of International Economics, Elsevier, vol. 33(1-2), pages 105-125, August.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_2375. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.