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212. 3 International Climate Priorities for 2024
- Author:
- Anne Christianson, Trevor Sutton, and Frances Colon
- Publication Date:
- 06-2024
- Content Type:
- Special Report
- Institution:
- Center for American Progress - CAP
- Abstract:
- As President Joe Biden’s first term draws to a close, his administration must deliver on three international climate policies to catalyze a 21st-century clean energy economy and avoid the worst impacts of climate change.
- Topic:
- Climate Change, Diplomacy, Economy, Inflation, Renewable Energy, Resilience, and Joe Biden
- Political Geography:
- Global Focus and United States of America
213. Extreme Heat Is More Dangerous for Workers Every Year
- Author:
- Jill Rosenthal, Rosa Barrientos-Ferrer, and Kate Petosa
- Publication Date:
- 06-2024
- Content Type:
- Special Report
- Institution:
- Center for American Progress - CAP
- Abstract:
- Federal and state governments should step up efforts—including adopting heat standards—to address increased on-the-job heat-related injury, illness, and death.
- Topic:
- Climate Change, Health, Labor Issues, Regulation, and Heat Waves
- Political Geography:
- Global Focus and United States of America
214. Protecting Children From Extreme Heat Is Critical for Their Health, Learning, and Development
- Author:
- Allie Schneider, Paige Shoemaker DeMio, and Hailey Gibbs
- Publication Date:
- 07-2024
- Content Type:
- Special Report
- Institution:
- Center for American Progress - CAP
- Abstract:
- As climate change intensifies extreme heat around the globe, policymakers must take steps to develop heat standards for children and support infrastructure improvements to ensure schools, child care centers, and communities are safe and healthy places for children.
- Topic:
- Climate Change, Education, Children, Child Development, and Heat
- Political Geography:
- Global Focus
215. The Price of War
- Author:
- Jonathan Federle, André Meier, Steffen Müller, Willi Mutschler, and Moritz Schularick
- Publication Date:
- 02-2024
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- In an integrated global economy, the economic fallout of war is not confined to the country where the conflict is fought but spills over to other countries. We study the economic effects of large interstate wars using a new data set spanning 150 years of data for more than 60 countries. War on a country’s territory typically leads to an output decline of 30 percent and a 15 percentage point increase in inflation. We find large negative effects also for countries that are geographically close to the war site, irrespective of their participation in the war. Output in neighboring countries falls by more than 10 percent over 5 years, and inflation rises by 5 percentage points on average. Negative spillovers decline with geographic distance and increase in the degree of trade integration with the war site. For very distant countries, output spillovers can turn positive so that wars create winners and losers in the international economy. We rationalize these findings in an international business cycle model, calibrated to capture key features of the data. As the war destroys capital in the war site and productivity falls, trade with nearby economies decreases, generating an endogenous supply-side contraction abroad.
- Topic:
- International Trade and Finance, War, Business, Geoeconomics, Russia-Ukraine War, Spillovers, and Supply Shocks
- Political Geography:
- Russia, Ukraine, and Global Focus
216. New Trade Models, Same Old Emissions?
- Author:
- Robin Sogalla, Joschka Wanner, and Yuta Watabe
- Publication Date:
- 04-2024
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- This paper investigates the elusive role of productivity heterogeneity in new trade models in the trade and environment nexus. We contrast the Eaton-Kortum and the Melitz models with firm heterogeneity to the Armington and Krugman models without heterogeneity. We show that if firms have a constant emission share in terms of sales — as they do in a wide range of trade and environment models — the three models’ emission predictions exactly coincide. Conversely, if firms have a constant emission intensity per quantity — a prominent alternative in the literature — the emission equivalence between the three models breaks. We provide a generalization that nests both constant emission shares in sales and constant quantity emission intensities as special cases. We calibrate the models to global production and trade data and use German firm-level data to estimate the key elasticity of how emission intensity changes with productivity. Our multi-industry quantification demonstrates that the role of firm heterogeneity depends both on the model and the estimated parameters. Moving from the Armington model to the EK model increases the emissions effect on trade, while moving from the Krugman model to the Melitz model decreases the emission effects on trade.
- Topic:
- Climate Change, Globalization, International Trade and Finance, Carbon Emissions, and Sustainable Development
- Political Geography:
- Global Focus
217. Build Carbon Removal Reserve to Secure Future of EU Emissions Trading
- Author:
- Wilfried Rickels, Mathias Fridahl, Roland Rothenstein, and Felix Schenuit
- Publication Date:
- 05-2024
- Content Type:
- Policy Brief
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- • A carbon central bank (CCB) that translates carbon removals into allowances would transform the European Union Emissions Trading System (EU ETS) from a fiat allowance to a gold standard system, ensuring unchanged net emissions on the path to net-zero greenhouse gas (GHG) targets. • Meeting such expectations would require a CCB with a clear commitment to a net-zero GHG target, but also with the capacity to manage the market on the path to that target. • This requires a strong institutional framework, which could be achieved by integrating the CCB into the European Central Bank (ECB), building on its reputation and capacity. • Given the long lead time to set up such an institution, the European Commission should already take the first steps to fulfil the other requirement, namely building up a large carbon removal certificate (CRC) reserve, which would provide the CCB with the credibility to stabilize the market in the future. • To fill the CRC reserve, the EU should emulate the US approach by immediately initiating resultbased carbon removal procurement as a first key step of a sequential approach to integrated carbon removal into climate policy. • This could be achieved by developing a centralized procurement program, supporting existing procurement programs, such as Sweden’s or Denmark’s, and incentivizing additional EU member states to initiate procurement. • An important prerequisite for this is the ability to bank CRCs that are not yet eligible for compliance with near-term EU climate targets and use them in later crediting periods.
- Topic:
- Climate Change, European Union, Carbon Emissions, Net Zero, and Carbon Central Bank
- Political Geography:
- Europe and Global Focus
218. Sovereign Haircuts: 200 Years of Creditor Losses
- Author:
- Clemens M. Graf von Luckner, Josefin Meyer, Carmen M. Reinhart, and Christoph Trebesch
- Publication Date:
- 06-2024
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- We study sovereign external debt crises over the past 200 years, with a focus on creditor losses, or "haircuts". Our sample covers 327 sovereign debt restructurings with external private creditors over 205 default spells since 1815. Creditor losses vary widely (from none to 100%), but the statistical distribution has remained remarkably stable over two centuries, with an average haircut of around 45 percent. The data also reveal that “serial restructurings”, meaning two or more debt exchanges in the same default spell, are on the rise. To account for this trend toward serial renegotiation, we introduce the “Bulow-Rogoff haircut” – a cumulative measure that captures the combined creditor loss across all restructurings during a single debt crisis. Using this measure, we show that longer debt crises deliver larger haircuts and that interim restructurings provide limited debt relief. We further examine past predictors of the size of haircuts and identify “rules of thumb” applicable to future defaults. Poorer countries, first-time debt issuers, and those that borrowed heavily from external creditors all record significantly higher haircuts in case of a default. Geopolitical shocks – such as wars, revolutions, or the break-up of empires – deliver the deepest haircuts. Sovereign debt investment disasters are often linked to (geo-)political disasters.
- Topic:
- Monetary Policy, Financial Crisis, Geopolitics, Credit, Sovereign Debt, Emerging Economies, Debt Restructuring, and Sovereign Default
- Political Geography:
- Global Focus
219. International investment income: patterns, drivers, and heterogeneous sensitivities
- Author:
- Giovanni Donato and Cedric Tille
- Publication Date:
- 07-2024
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- Financial globalization has led to a large increase in international asset holdings. While the rise of associated dividend and interest flows has until now been muted by the decreasing trend in interest rates, this pattern could change, leading to a larger role of investment income flows in the balance of payments. We use a broad sample of countries to document the heterogeneous evolution of the various components of investment income flows, with a rising role of FDI and equity income, especially in advanced economies. We then assess the impact of various variables on yields with a panel analysis. Various drivers have highly heterogeneous effects across investment categories and country groups, often impacting the yields on both assets and liabilities. This translates into substantial heterogeneity in the response of countries’ income balance, due to different compositions of asset and liabilities. This heterogeneity is amplified if we consider country-specific estimates in complement to the panel ones. Focusing on the impact of changes in interest rates, we find that higher rates only had a limited impact in the 2013 taper tantrum, investment income balances are likely to benefit from higher US rates in the current phase of higher rates, with offsetting effects of higher domestic rates.
- Topic:
- International Trade and Finance, Foreign Direct Investment, Financial Markets, Investment, Interest Rates, and Financial Integration
- Political Geography:
- Global Focus
220. Beyond Borders: Do Gender Norms and Institutions Affect Female Businesses?
- Author:
- Holger Görg and Ina C. Jäkel
- Publication Date:
- 08-2024
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- In this paper, we investigate whether gender norms and institutions act as a constraint to the performance of female businesses. We exploit novel and unique micro data on start-ups in Denmark, which we combine with information on individual-level characteristics of the entrepreneur as main decision maker of the firm. We overcome the challenge of disentangling norms and institutional biases against women from other constraints and hurdles that female businesses might face by exploiting detailed trade data. In this trade context, we study the relative performance of firms across markets with varying institutions, while controlling for other factors that affect female businesses uniformly across all markets. We provide evidence that gender inequality and institutional biases against women in trade partner countries play an important role in explaining gender differences in export and import behaviour. We also perform an event study of a concrete policy change in a destination market – the introduction of quotas for the share of females on the boards of directors in Norway – and how it has affected the gender gap in trade participation.
- Topic:
- Globalization, International Trade and Finance, Inequality, Startup, Gender, Opportunity, and Firm Internationalization
- Political Geography:
- Global Focus