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Begin New Search Publishing Institution Lowy Institute for International Policy Author Warwick McKibbin

1. Global fiscal consolidation

Author:
Warwick McKibbin
Publication Date:
05-2011
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
The build up in government debt in response to the 'great recession' has raised a number of policy dilemmas for individual countries as well as the world as a whole. Where the government fiscal stimulus was seen as necessary to restore confidence to markets and stimulate deteriorating economies in the aftermath of the 'great recession' by 2010 the massive fiscal stimulus programs and associated run-up in debt had, for many economies, become a confidence sapping exercise. This need for a change of fiscal policy stance has fuelled another debate that has two related aspects. One is the impact of fiscal consolidation on economies that are tightening and the flow-on effects to the world economy. The other debate is how much tightening there should be and how quickly.
Topic:
Debt, Economics, Global Recession, and Financial Crisis
Political Geography:
Asia and Australia/Pacific

2. Confronting the Crisis of International Climate Policy

Author:
Warwick McKibbin, Fergus Green, and Greg Picker
Publication Date:
07-2010
Content Type:
Policy Brief
Institution:
Lowy Institute for International Policy
Abstract:
After an extraordinary build-up, stratospheric public expectations, unprecedented political attention, and the presence of more than 100 heads of State, the Copenhagen Climate Change Conference spectacularly failed to produce an international response to climate change commensurate with the scale of the problem. Instead, the Conference revealed with great drama the fundamental weaknesses of the existing framework for international climate governance. Even the Copenhagen Accord – a 3-page, heavily-qualified, nonbinding Statement of political intent, and the singular achievement of the Conference – was vigorously resisted by a number of countries when it was submitted to the full plenary for adoption on the final night of negotiations. As exhausted delegates lay lifeless, strewn across the cavernous negotiating hall watching Venezuelan officials block the adoption of the Accord because it made reference to the role of market mechanisms in reducing greenhouse gas emissions, even the most ardent advocate of the 20-year old UN climate process could not have helped but think 'there must be a better way'.
Topic:
Climate Change, Energy Policy, International Cooperation, Treaties and Agreements, and United Nations

3. The economic and environmental effects of border tax adjustments for climate change policy

Author:
Warwick McKibbin and Peter J. Wilcoxen
Publication Date:
02-2009
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
For the foreseeable future, climate change policy will be considerably more stringent in some countries than in others. Indeed, the United Nations Framework Convention on Climate Change explicitly states that developed countries must take meaningful action before any obligations are to be placed on developing countries. However, differences in climate policy will lead to differences in energy costs, and to concerns about competitive advantage. In high-cost countries, there will be political pressure to impose border adjustments, or “green tariffs”, on imports from countries with little or no climate policy and low energy costs. The adjustments would be based on the carbon emissions associated with production of each imported product, and would be intended to match the cost increase that would have occurred had the exporting country adopted a climate policy similar to that of the importing country. In this paper, we estimate how large such tariffs would be in practice, and then examine their economic and environmental effects using G-Cubed, a detailed multi-sector, multi-country model of the world economy. We find that the tariffs would be small on most traded goods, would reduce leakage of emissions reduction very modestly, and would do little to protect import-competing industries. We conclude that the benefits produced by border adjustments would be too small to justify their administrative complexity or their deleterious effects on international trade.
Topic:
Climate Change, Economics, Environment, International Cooperation, International Political Economy, International Trade and Finance, and United Nations

4. What does a free-trade area of the Asia-Pacific mean to China

Author:
Warwick McKibbin and Tingsong Jiang
Publication Date:
05-2008
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
A Free Trade Area of the Asia-Pacific (FTAAP) has been proposed as a long-term prospect by the Asia-Pacific Economic Cooperation (APEC). This paper examines the impact of the FTAAP on the national and regional economies in China using a suite of general equilibrium models: APG-Cubed, a dynamic global model; GTAP, a static global model; and CERD, a static China model with regional dimension. The impact on the Chinese economy of the APFTA is also compared with those of other forms of FTAs such as the ASEAN-China FTA (ACFTA) and the East Asia FTA (EAFTA).
Topic:
International Trade and Finance and Markets
Political Geography:
China, Asia, and Australia/Pacific

5. Expecting the Unexpected: Macroeconomic Volatility and Climate Policy

Author:
Warwick McKibbin, Peter J. Wilcoxen, and Adele Morris
Publication Date:
10-2008
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
To estimate the emissions reductions and costs of a climate policy, analysts usually compare a policy scenario with a baseline scenario of future economic conditions without the policy. Both scenarios require assumptions about the future course of numerous factors such as population growth, technical change, and non-climate policies like taxes. The results are only reliable to the extent that the future turns out to be reasonably close to the assumptions that went into the model.
Topic:
Climate Change, Economics, and Markets

6. Building on Kyoto: towards a realistic global climate agreement

Author:
Warwick McKibbin and Peter J. Wilcoxen
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
As a mechanism for controlling climate change, the Kyoto Protocol has not been a success. Over the decade from its signing in 1997 to the beginning of its first commitment period in 2008, greenhouse gas emissions in the industrial countries subject to targets under the protocol did not fall as the protocol intended. Instead, emissions in many countries rose rapidly. It is now abundantly clear that as a group, the countries bound by the protocol have little chance of achieving their Kyoto targets by the end of the first commitment period in 2012. Moreover, emissions have increased substantially as well in countries such as China, which were not bound by the protocol but which will eventually have to be part of any serious climate change regime.
Topic:
Climate Change, Economics, Environment, Markets, and Treaties and Agreements
Political Geography:
China

7. China can grow and still help prevent the tragedy of the carbon dioxide commons

Author:
Warwick McKibbin, Peter J. Wilcoxen, and Wing Thye Woo
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
Under reasonable assumptions, China could achieve parity in living standard with Western Europe by 2100, and India by 2150. Climate change, however, may be a key obstacle preventing such a convergence. The business-as-usual (BAU) growth path of the world might increase concentration of atmospheric to unsafe levels and cause significant negative environmental feedback before China achieves parity in living standards with the OECD countries. We use a dynamic multi-country general equilibrium model (the G-Cubed Model) to project a realistic BAU trajectory of CO2 emissions, and we find it to be even above the CO2 emissions from the high-growth scenario estimated by the Energy Information Agency in 2007. This outcome is a reminder that it has been usual so far to underestimate the growth in China energy consumption.
Topic:
Climate Change, Economics, Environment, and Markets
Political Geography:
China and Asia

8. Sensible climate policy

Author:
Warwick McKibbin
Publication Date:
02-2005
Content Type:
Policy Brief
Institution:
Lowy Institute for International Policy
Abstract:
The Kyoto Protocol enters into force on February 16, 2005. Nearly thirteen years after negotiations began at the Rio Earth Summit and seven years after the Kyoto Protocol was negotiated, this should be a cause for global celebration. Yet the basic tenets on which the Kyoto Protocol are built are flawed and leave it worryingly vulnerable to failure. Already proponents of Kyoto are looking for alternatives “beyond Kyoto”. It is no accident that it has taken so long for the Protocol to enter into force with so few of the major future greenhouse emitters effective participants.
Topic:
International Relations, Energy Policy, and Environment
Political Geography:
Australia/Pacific

9. Transpacific trade imbalances: causes and cures

Author:
Warwick McKibbin, Park Yung Chul, and Jong-Wha Lee
Publication Date:
09-2004
Content Type:
Policy Brief
Institution:
Lowy Institute for International Policy
Abstract:
This paper explores the causes of the transpacific trade imbalances using an empirical global model. It also evaluates the impact of various policies to reduce these imbalances. We find the fundamental cause of trade imbalances since 1997 is changes in saving-investment gaps, attributed to the surge of the U.S fiscal deficits and the decline of East Asia's private investment after the 1997 financial crisis. Our simulation results show that a revaluation of East Asia's exchange rates by 10 percent (effectively a shift in monetary policy) cannot resolve the imbalances. We find East Asia's concerted efforts to stimulate aggregate demand can have significant impacts on trade balances globally, but the impact on the US trade balance is not large. US fiscal contraction is estimated to have large impacts on the US trade position overall and on the bilateral trade balances with East Asian economies. These results suggest that in order to improve the transpacific imbalance, macroeconomic adjustment will need to be made on both sides of the Pacific. lowy institute for international policy.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Israel and East Asia