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on Economic Growth |
| By: | Gregory Casey; Stephie Fried; William B. Peterman |
| Abstract: | We study the impact of climate policy on the long-run real interest rate in a tractable climate-economy model based on the work of Golosov et al. (2014). When the growth rate of the carbon tax exceeds the growth rate of the price of at least one type of fossil energy, the tax reduces the long-run growth rates of consumption and investment, pushing the interest rate up. We find that if fossil energy prices are constant, a carbon tax that grows at 3.5 percent per year decreases the long-run interest by over 50 basis points. This carbon tax growth rate achieves net zero emissions at the lowest possible cost. |
| Keywords: | climate policy; R-star |
| JEL: | H23 O44 Q43 Q54 |
| Date: | 2024–12–23 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:99300 |
| By: | Claudia Goldin |
| Abstract: | Fertility levels have greatly decreased in virtually every nation in the world, but the timing of the decline has differed even among developed countries. In Europe, Asia, and North America, total fertility rates of some nations dipped below the magic replacement figure of 2.1 as early as the 1970s. But in other nations, fertility rates remained substantial until the 1990s but plummeted subsequently. This paper addresses why some countries in Europe and Asia with moderate fertility levels in 1980s, have become the “lowest-low” nations today (total fertility rates of less than 1.3), whereas those that decreased earlier have not. Also addressed is why the crossover point for the two groups of nations was around the 1980s and 1990s. An important factor that distinguishes the two groups is their economic growth in the 1960s and 1970s. Countries with “lowest low” fertility rates today experienced rapid growth in GNP per capita after a long period of stagnation or decline. They were catapulted into modernity, but the beliefs, values, and traditions of their citizens changed more slowly. Thus, swift economic change may lead to both generational and gendered conflicts that result in a rapid decrease in the total fertility rate. |
| JEL: | J11 J13 J16 N30 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33311 |
| By: | Corneo, Giacomo |
| Abstract: | History shows militarily dominant states that pursue imperialism, relying on their might to extort resources from weaker states. Occasionally, the latter revolt and the dominant state suffers some casualties. This paper explores imperialism along steady-growth paths. If the dominant state maximizes domestic welfare, it should eventually abandon imperialism because its safety costs asymptotically overrun its material benefits. To shed light on diametrically opposed historical records, I propose a model of endogenous ideology and war bias in which the political elite cares about self-image. If that concern is strong enough, the political elite gradually identifies with its country's mission of hegemony and imperialism persists. It is first driven by material concerns and later by ideal ones. Despite its divergent preferences, the population of a dominant state generally has little interest to oppose imperialism. |
| Keywords: | imperialism, long-run growth, value of life, self-image |
| JEL: | H8 N4 O0 Z1 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:fubsbe:306844 |
| By: | Pratik Thakkar (Indira Gandhi Institute of Development Research); Kausik Gangopadhyay (Indian Institute of Management Kozhikode) |
| Abstract: | Weather shocks associated with global climate change engender substantial damages, in the order of multi-billion dollars annually, to the Indian economy. Using data from 33 states during 1981--2022, we explore the effect of weather shock on India's economic growth, in the presence of interplay of temperature and precipitation levels. To avoid arbitrary assumptions of parametric estimation, we estimate the economic damages resulting from weather shocks using semi-parametric varying coefficient generalised additive models (VC-GAM). We select the optimal class of VC-GAM among 29 possible classes based on four relevant criteria. From the optimal class, out of 84 possible specifications, we determine the optimal damage specification using the out-of-sample and in-sample performance. We find that the contemporaneous year-on-year weather change and lagged year-on-year precipitation change have an impact on the per capita economic growth through total factor productivity channel, whereas only contemporaneous precipitation level have an impact on the per capita economic growth through labour productivity channel. We observe that the marginal effect of a contemporaneous weather change varies with the level of lagged precipitation level, whereas high lagged precipitation level combined with a low to moderate lagged temperature level exacerbates the detrimental impact of a positive lagged precipitation change on the per capita economic growth for India. One potential mechanism through which contemporaneous and lagged weather variables could have an impact on the per capita economic growth, is based on the impact of soil moisture quality. We have demonstrated our results to be considerably robust. |
| Keywords: | Weather, Damage function, Varying coefficient generalized additive models, Economic growth, India |
| JEL: | C14 O44 O53 Q54 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ind:igiwpp:2024-021 |
| By: | Yoosoon Chang (Department of Economics, Indiana University); J. Isaac Miller (University of Missouri); Joon K. Park (Department of Economics, Indiana University) |
| Abstract: | We study dynamic interactions of economic activity and climate using an economic-climatic system that involves the global distribution of temperature anomalies as a functional variable in addition to global aggregate variables representing economic activity, climate forcings from greenhouse gases and tropospheric aerosols resulting from sulfur dioxide emissions. We identify three types of anthropogenic shocks and a multi-dimensional natural climate variation shock, as well as external solar and volcanic shocks. The multi-dimensional natural shock has a large but ephemeral effect on climate but a relatively small effect on economic activity. In contrast, a carbon-based anthropogenic shock is historically the most important driver of both economic growth and climate change. By isolating the channel of shocks through climate onto economic activity, we distinguish between the direct effect (growth) and indirect effect (climate-induced economic damage) of anthropogenic shocks. Relative to an average growth rate of 2.50% per year, we find that the average growth rate would have been as high as 2.64% without damages from anthropogenic shocks. Because of its effect on climate, the multi-dimensional natural shock has a more volatile though less persistent climate-induced effect on economic activity than do the balance of the three anthropogenic shocks. |
| Keywords: | structural analysis of economic-climatic system, economic damages, vector autoregression, functional autoregression, global temperature distributions |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:inu:caeprp:2024007 |