Citation

Discussion Paper Details

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Title: On the Spatial Economic Impact of Global Warming

Author(s): Klaus Desmet and Esteban Rossi-Hansberg

Publication Date: November 2012

Keyword(s): carbon, climate change, growth, international and regional trade, migration, mobility frictions, regional economics and space

Programme Area(s): International Trade and Regional Economics

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 Reference

Desmet, K and Rossi-Hansberg, E. 2012. 'On the Spatial Economic Impact of Global Warming'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9220