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Research Seminar of International Laboratory for Macroeconomic Analysis: Irina Bakalova «Stability and Effectiveness of International Climate Cooperation: Impact of the Characteristics of Countries and the Design of Emissions Trading System»

Event ended

Dear Colleagues,

International Laboratory for Macroeconomic Analysis invites everyone to join our research seminar on the 15th of  December 2022 (Thursday) at 04:00 PM (Moscow). 

Speaker: Irina Bakalova

Theme: «Stability and Effectiveness of International Climate Cooperation: Impact of the Characteristics of Countries and the Design of Emissions Trading System»

Abstract:

We analyze the impact of heterogeneity of countries’ characteristics and allocations of emissions permits on the stability and effectiveness of international climate cooperation. We use an integrated assessment model to simulate the strategic interaction between 12 considered regions in global and partial cooperation, implementation of emissions trading system, and without cooperation. Each region is represented by a discrete-time growth model, and as a by-product of the production process, countries emit carbon dioxide. Emissions are accumulating in the atmosphere and causing extra warming of the ocean and atmosphere. The global warming process leads to economic losses via different channels. In addition to the classical Nordhaus-type proportional damage formulation, we include the non-linear impact of temperature rise on the total factor productivity growth rate and climate-induced capital losses. The results demonstrate that the effect of heterogeneity of climate damages of coalition members on the coalition stability is positive only for low to moderate levels of heterogeneity, and is negative for more heterogeneous coalitions, whereas in the existing literature only positive effect has been shown. Moreover, we demonstrate the U-shaped effect of heterogeneity in damages on coalition effectiveness, so reaching both stable and effective coalition is difficult is this context. At the same time, the study considers emissions trading system as an alternative way of international cooperation. The results demonstrate that emissions trading system with a proposed allocation of allowances can achieve both stability and effectiveness of international climate cooperation.

Working language: English

Zoom link: 

https://us06web.zoom.us/j/81082829894?pwd=Q1FDdDk0Q2JyQXhHZm9BVHFiRWtkdz09

Conference ID: 810 8282 9894

Password: 600410

Looking forward to see you.