The coronavirus pandemic has led many countries to initiate unprecedented economic recovery packages. There have been widespread calls to prioritize dealing with a second, looming crisis—climate change—when designing these economic stimulus packages. In this paper we identify policies that promote both goals simultaneously. We analyze both the long-run climate impacts from coronavirus-related economic recovery policies, and the impacts of long-run climate policies on economic recovery…
Publication Author: Johan Gars
Measuring the impact of agricultural production shocks on international trade flows
The purpose of this study is to measure the sensitivity of traded quantities and trade unit values to agricultural production shocks. We develop a general equilibrium model of trade in which production shocks in exporting countries affect both traded quantities and trade unit values. The model includes per-unit trade costs and develops a methodology to quantify their size exploiting the trade unit value data. Using…
Fuel for economic growth?
Using data for 134 countries, we document that countries deriving a larger share of their energy from fossil fuel are richer and grow faster. We then set up an endogenous growth model where final output is produced with a non-energy and two substitutable energy intermediate goods: fossil fuel and biofuel. With non-energy and energy goods being gross complements, and with higher costs for improving the…
The Unintended Consequences of a Global Carbon Tax
Climatic tipping points and optimal fossil fuel use
The economics of climate change is characterized by many uncertainties regarding, for instance, climate dynamics, economic damages and potentially irreversible climate catastrophes. Using an optimal growth model of a fossil-fuel-driven economy subject to cli- mate externalities and potentially irreversible climatic regime shifts, this paper contributes to the understanding of how the risk of such events impacts on optimal fossil-fuel use, carbon taxes and fossil-fuel prices…
Optimal taxation in the macroeconomics of climate change
Climate change has in recent years moved to the forefront of the policy scene. At the same time, the research literature on macroeconomic aspects of climate change has grown and broadened significantly. In this review, we survey and discuss this literature, with special attention given to results that help shed light on important qualitative questions regarding how an optimal carbon tax should be set. The…
Why Ecologists Should Care about Financial Markets
Financial actors such as international banks and investors play an important role in the global economy. This role is shifting due to financial innovations, increased sustainability ambitions from large financial actors, and changes in international commodity markets. These changes are creating new global connections that potentially make financial markets, actors, and instruments important aspects of global environmental change. Despite this, the way financial markets and…
Climatic tipping points and optimal fossil fuel use
The economics of climate change is characterized by many uncertainties, including climate dynamics, economic damages and potentially irreversible climate catastrophes. Using an optimal growth model of a fossil-fuel driven economy subject to a climate externality and potentially irreversible climatic events, this paper contributes to the understanding of how the risk of such events impacts on optimal fossil-fuel over time. Catastrophic events are modelled as irreversible…
Three necessary conditions for establishing effective Sustainable Development Goals in the Anthropocene
The purpose of the United Nations-guided process to establish Sustainable Development Goals is to galvanize governments and civil society to rise to the interlinked environmental, societal, and economic challenges we face in the Anthropocene. We argue that the process of setting Sustainable Development Goals should take three key aspects into consideration. First, it should embrace an integrated social-ecological system perspective and acknowledge the key dynamics…