nep-res New Economics Papers
on Resource Economics
Issue of 2022‒10‒03
two papers chosen by
Maximo Rossi
Universidad de la República

  1. International Trade and the Environment: Three Remaining Empirical Challenges* By Jevan Cherniwchan; M.Scott Taylor
  2. Green Road is Open: Economic Pathway with a Carbon Price Escalator By Lucas Bretschger

  1. By: Jevan Cherniwchan (Department of Economics, Carleton University); M.Scott Taylor (Department of Economics, University of Calgary)
    Abstract: Considerable progress that has been made in our understanding of the relationship between international trade and the environment since Gene Grossman and Alan Krueger published their now seminal working paper examining the potential environmental effects of the North American Free Trade Agreement in 1991. This review uses their original paper as a guide to highlight key developments along three main branches of research that all stem from their analysis: (i) the interaction between international trade, economic growth, and environmental outcomes, (ii) the role of environmental regulation in determining trade and investment flows, and (iii) estimating the relative magnitudes of the scale, composition, and technique effects induced by trade. It discusses key developments along each branch, with a particular focus on the empirical challenges that have impeded progress. It also highlights an area along each branch that is ripe for further study. These areas are termed the Three Remaining Challenges.
    Keywords: International Trade and the Environment; Environmental Kuznets Curve; Pollution Haven Hypothesis
    JEL: F18 F64 O44 Q56
    Date: 2022–05–09
  2. By: Lucas Bretschger (CER-ETH – Center of Economic Research at ETH Zurich, Zuerichbergstrasse 18 8092 Zurich, Switzerland)
    Abstract: The paper develops the concept of "Economic Pathways" (EPs), which characterize theory-based scenarios for an economy that strives to achieve decarbonization by mid-century. The theoretical framework derives closed-from analytical solutions for consumption, innovation, emissions, and population. The EPs differ in the stringency of assumed policies and associated income and emission development. Unlike the well-known "Shared Socioeconomic Pathways", they allow important causalities between the economy and the environment to be included and significantly narrow the scope of likely future developments. The quantitative part serves to illustrate the long-term consequences of climate policy. I show that deep decarbonization only moderately delays economic development, but requires increasing escalation of the carbon price. Subsidies to the research sector support income development significantly. The paper argues that the adoption of more stringent climate policies becomes more likely as the phase-out of fossil fuels increases. The "Green Road" is not only feasible, but also attractive and realistic.
    Keywords: Climate policies, consumption growth, population growth, endogenous innovation, economic pathways
    JEL: Q43 O47 Q56 O41
    Date: 2022–09

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