Stuck in a corner? Climate policy in developing countries

Research output: Contribution to journalArticle

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.

Original languageEnglish (US)
Pages (from-to)1535-1554
Number of pages20
JournalMacroeconomic Dynamics
Volume22
Issue number6
DOIs
StatePublished - Sep 1 2018

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Climate policy
Developing countries
Labor
Energy intensity
Developed countries
Mismatch
Energy requirements
Welfare cost
Macroeconomic models
Energy

Keywords

  • Carbon Tax
  • Climate Policy
  • Development
  • Macroeconomics

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Stuck in a corner? Climate policy in developing countries. / Fried, Stephanie.

In: Macroeconomic Dynamics, Vol. 22, No. 6, 01.09.2018, p. 1535-1554.

Research output: Contribution to journalArticle

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