Non-cooperative and cooperative responses to climate catastrophes in the global economy: a North-South perspective
van der Ploeg, Frederick ; de Zeeuw, Aart
Oxford Centre for the Analysis of Resource Rich Economies
University of Oxford - Oxford
2015
34 p.
climate change ; economic growth ; gas emission ; international cooperation ; productivity ; taxation
developed countries ; developing countries
OxCarre Research Paper
149
Environment
English
Bibliogr.
"The global response to a catastrophic shock to productivity which becomes more imminent with global warming is to have carbon taxes to curb the risk of a calamity and to accumulate precautionary capital to facilitate smoothing of consumption. Our multi-region model of growth and climate change indicates that without international lump-sum transfers the cooperative global response to such stochastic tipping points requires converging carbon taxes for developing and developed regions. Non-cooperative responses lead to a bit more precautionary saving and lower diverging carbon taxes. Precautionary capital suffers less from international free-rider problems than the carbon taxes. We illustrate the various outcomes with a calibrated North-South model of the global economy."
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