Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-26T04:22:37.942Z Has data issue: false hasContentIssue false
  • English
  • Français

STUCK IN A CORNER? CLIMATE POLICY IN DEVELOPING COUNTRIES

Published online by Cambridge University Press:  21 November 2017

Stephie Fried
Stephie Fried*
Affiliation:
Arizona State University
*
Address correspondence to: Stephie Fried, Department of Economics, W.P. Carey School of Business, Arizona State University, 501 E. Orange Street Tempe AZ 85287. e-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

Much of the capital equipment used in developing countries is created in the OECD and, thus, is designed to make optimal use of the relative supplies of capital, labor, and energy in these developed countries. However, differences in capital–labor ratios between developed and developing countries create a mismatch between the energy requirements of this capital and developing countries' optimal levels of energy intensity. Using a calibrated macroeconomic model, this paper analyzes the implications of this mismatch for climate policy. I find that using capital equipment with “inappropriate” energy intensity has sizeable consequences for both the effectiveness and the welfare cost of climate policies in developing countries.

Keywords

Climate PolicyMacroeconomicsCarbon TaxDevelopment
Type
Articles
Information
Macroeconomic Dynamics , Volume 22 , Issue 6 , September 2018 , pp. 1535 - 1554
Copyright
Copyright © Cambridge University Press 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

I thank Betty Daniel, Mark Jacobsen, Irina Telyukova, James Hamilton, Thomas Baranga, Valerie Ramey, Giacomo Rondina, and William Peterman, as well as seminar participants at UCSD for valuable suggestions. I thank NSF-IGERT for support.

References

REFERENCES

Acemoglu, Daron and Zilibotti, Fabrizio (2001) Productivity differences. Quarterly Journal of Economics, 116 (2), 563–606.Google Scholar
Basu, Susanto and Weil, David (1998) Appropriate technology and growth. Quarterly Journal of Economics, 113 (4), 1025–1054.Google Scholar
Bernstein, Mark and Griffin, J. (2006) Regional Differences in the Price-Elasticity of Demand for Energy. NREL subcontract report SR-620-39512.Google Scholar
Bose, Ranjan and Shukla, Megha (1999) Elasticities of electricity demand in India. Energy Policy 27, 137–146.Google Scholar
Brock, William, Engström, Gustav, and Xepapadeas, Anastasios (2014) Spatial climate-economic models in the design of optimal climate policies across locations. European Economic Review 69, 78–103.Google Scholar
Chichilnisky, Graciela and Heal, Geoffrey (1994) Who should abate carbon emissions? An international perspective. Economic Letters 44, 443–449.Google Scholar
Copeland, Brian and Taylor, Scott (1994) North-south trade and the environment. Quarterly Journal of Economics 109, 755–787.Google Scholar
Feenstra, Robert, Inklaar, Robert, and Timmer, Marcel (2013) The Next Generation of the Penn World Table. NBER working paper 19255.Google Scholar
Feldstein, Martin and Horioka, Charles (1980) Domestic saving and international capital flows. Economic Journal 90, 314–329.Google Scholar
Golosov, Mikhail, Hasler, John, Krusell, Per, and Tsyvinski, Aleh (2014) Optimal taxes on fossil fuel in general equilibrium Econometrica 82, 41–88.Google Scholar
Hassler, John and Krusell, Per (2012) Economics and climate change: Integrated assessment in a multi-region world. Journal of the European Economic Association 10, 974–1000.Google Scholar
Hassler, John and Olovsson, Conny (2012) Energy-Saving Technical Change. NBER working paper 18456.Google Scholar
IPCC (2014) Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Pachauri, R.K. and Meyer, L.A. (eds.). Geneva, Switzerland, IPCC.Google Scholar
Krusell, Per and Smith, Anthony (2009) Macroeconomics and Global Climate Change: Transition for a Many-Region Economy. Working paper.Google Scholar
Nordhaus, William and Boyer, Joseph (2000) Warming the World: Economic Models of Global Warming. Cambridge MA: The MIT Press.Google Scholar
Sheeran, Kristen (2006) Who should abate carbon emissions? A note. Environmental and Resource Economics 35, 89–98.Google Scholar
Stokey, Nancy (1998) Are there limits to growth? International Economic Review 39, 1–31.Google Scholar