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Knowledge Diffusion, Endogenous Growth, and the Costs of Global Climate Policy

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  • Lucas Bretschger

    () (ETH Zurich, Switzerland)

  • Filippo Lechthaler

    () (ETH Zurich, Switzerland)

  • Sebastian Rausch

    () (ETH Zurich, Switzerland)

  • Lin Zhang

    () (ETH Zurich, Switzerland)

Abstract

This paper examines the effects of knowledge diffusion on growth and costs of climate policy. We develop a general equilibrium model with endogenous growth which represents knowledge diffusion between sectors and regions. Knowledge diffusion depends on accessibility and absorptive capacity which we estimate econometrically using patent and citation data. Knowledge diffusion leads to a “greening” of economies boosting productivity of “clean” carbon-extensive sectors. Knowledge diffusion lowers the costs of global climate policy by about 90% for emerging countries (China) and 20% for developed regions (Europe and USA), depending on the substitutability between different knowledge types.

Suggested Citation

  • Lucas Bretschger & Filippo Lechthaler & Sebastian Rausch & Lin Zhang, 2015. "Knowledge Diffusion, Endogenous Growth, and the Costs of Global Climate Policy," CER-ETH Economics working paper series 15/226, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  • Handle: RePEc:eth:wpswif:15-226
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    4. Wei Jin & Rick van der Ploeg & Lin Zhang, 2020. "Do We Still Need Carbon-Intensive Capital When Transitioning to a Green Economy?," CESifo Working Paper Series 8745, CESifo.
    5. Roy, Jayjit, 2017. "On the environmental consequences of intra-industry trade," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 50-67.
    6. Hans Gersbach & Marie-Catherine Riekhof, 2017. "Technology Treaties and Climate Change," CER-ETH Economics working paper series 17/268, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    7. Luigi Aldieri & Concetto Paolo Vinci, 2018. "Green Economy and Sustainable Development: The Economic Impact of Innovation on Employment," Sustainability, MDPI, Open Access Journal, vol. 10(10), pages 1-11, October.
    8. Jiangfeng Hu & Zhao Wang & Qinghua Huang & Xiaoqin Zhang, 2019. "Environmental Regulation Intensity, Foreign Direct Investment, and Green Technology Spillover—An Empirical Study," Sustainability, MDPI, Open Access Journal, vol. 11(10), pages 1-15, May.
    9. Walheer, Barnabé, 2018. "Labour productivity growth and energy in Europe: A production-frontier approach," Energy, Elsevier, vol. 152(C), pages 129-143.
    10. Pothen, Frank & Hübler, Michael, 2018. "The interaction of climate and trade policy," European Economic Review, Elsevier, vol. 107(C), pages 1-26.
    11. Taran Faehn & Gabriel Bachner & Robert Beach & Jean Chateau & Shinichiro Fujimori & Madanmohan Ghosh & Meriem Hamdi-Cherif & Elisa Lanzi & Sergey Paltsev & Toon Vandyck & Bruno Cunha & Rafael Garaffa , 2020. "Capturing Key Energy and Emission Trends in CGE models: Assessment of Status and Remaining Challenges," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 5(1), pages 196-272, June.
    12. Wei Jin & ZhongXiang Zhang, 2018. "Capital Accumulation, Green Paradox, and Stranded Assets: An Endogenous Growth Perspective," Working Papers 2018.33, Fondazione Eni Enrico Mattei.
    13. Rausch, Sebastian & Zhang, Da, 2018. "Capturing natural resource heterogeneity in top-down energy-economic equilibrium models," Energy Economics, Elsevier, vol. 74(C), pages 917-926.
    14. Iman Miremadi & Yadollah Saboohi, 2018. "Planning for Investment in Energy Innovation: Developing an Analytical Tool to Explore the Impact of Knowledge Flow," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 7-19.
    15. Jan Abrell & Mirjam Kosch & Sebastian Rausch, 2019. "How Effective Was the UK Carbon Tax? — A Machine Learning Approach to Policy Evaluation," CER-ETH Economics working paper series 19/317, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    16. Luigi Aldieri & Concetto Paolo Vinci, 2017. "The Role of Technology Spillovers in the Process of Water Pollution Abatement for Large International Firms," Sustainability, MDPI, Open Access Journal, vol. 9(5), pages 1-8, May.
    17. Sebastian Rausch & Hidemichi Yonezawa, 2018. "The Intergenerational Incidence Of Green Tax Reform," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 9(01), pages 1-25, February.
    18. Wan, Bingyue & Tian, Lixin & Zhu, Naiping & Gu, Liqin & Zhang, Guangyong, 2018. "A new endogenous growth model for green low-carbon behavior and its comprehensive effects," Applied Energy, Elsevier, vol. 230(C), pages 1332-1346.
    19. Adam Rose & Dan Wei & Noah Miller & Toon Vandyck, 2017. "Equity, Emissions Allowance Trading and the Paris Agreement on Climate Change," Economics of Disasters and Climate Change, Springer, vol. 1(3), pages 203-232, October.
    20. Sansi Yang & C. Richard Shumway, 2020. "Knowledge accumulation in US agriculture: research and learning by doing," Journal of Productivity Analysis, Springer, vol. 54(2), pages 87-105, December.

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    More about this item

    Keywords

    Technological Change: Choices and Consequences; Environment and Growth; Technological Innovation; Computable General Equilibrium Models;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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