Ishan Nath

We formulate a two-country model of trade and creative destruction by domestic and foreign firms. In the model, trade liberalization quickens the pace of creative destruction and facilitates the flow of technology across countries. The resulting dynamic gains from idea flows are at least as large as the static gains from trade. In our model, such international idea flows are essential for understanding why country technologies do not drift apart, and for matching two properties of export dynamics. First, contracting firms are more likely to lose exports than domestic sales, whereas expanding firms are more likely to gain domestic sales than to gain exports. Exports are vulnerable to foreign as well as domestic creative destruction, whereas domestic sales are comparatively insulated from foreign creative destruction by trade barriers. Second, the product composition of a country’s exports exhibits ample turnover. This is consistent with our model, in which a country’s comparative advantage is constantly shifting due to global creative destruction.

The most prevalent and perhaps most popular climate policies in the U.S. are Renewable Portfolio Standards (RPS) that mandate that renewable sources, such as wind and solar, produce a specified share of electricity, yet little is known about their efficiency. Using a comprehensive data set and a difference-in-differences style research design, we find that electricity prices are 11% higher seven years after RPS passage and carbon emissions are 10-25% lower. Point estimates suggest that the cost per ton of CO2 abatement ranges from $60-$300, though these estimates do not account for possible future cost reductions due to RPS-induced technological progress.

This paper evaluates the potential for global reallocation between agricultural and non-agricultural production to contribute to climate change adaptation. Empirical estimates using a global sample of firms suggest that rising temperatures reduce productivity less in non-agriculture than agriculture, implying large potential gains if hot countries could increase food imports and shift labor toward manufacturing. However, model counterfactuals show that subsistence consumption needs and high trade barriers combine to create a “food problem” in which climate change instead intensifies agricultural specialization in especially vulnerable regions. Simulations suggest that reducing trade barriers can significantly reduce climate damages, especially in poor countries.

The quantity of water within Earth and its atmosphere is fixed over time, but water available for human consumption evolves dynamically. We use globally comprehensive geospatial data to establish stylized facts about recent changes in global water resources and potential implications for human welfare. We show that the net change in water volume on arable lands—which account for 90 percent of human water consumption—is almost exactly zero. Rapid water loss is concentrated in regions with large populations, low existing water resources, and low agronomic potential. Incorporating trade data shows that water-scarce regions are net importers of water-intensive goods.

We formulate a two-country model of trade and creative destruction by domestic and foreign firms. In the model, trade liberalization quickens the pace of creative destruction and the flow of technology across countries. International idea flows are essential for understanding why country technologies do not drift apart and for matching two empirical facts. First, contracting firms are more likely to lose exports than domestic sales, whereas the opposite is true for expanding firms. Second, the product composition of a country’s exports exhibits ample turnover. In our model, a country’s comparative advantage is constantly shifting due to global creative destruction.

Using 40 countries’ subnational data, we estimate age-specific mortality-temperature relationships and extrapolate them to countries without data today and into a future with climate change. We uncover a U-shaped relationship where extre6me cold and hot temperatures increase mortality rates, especially for the elderly. Critically, this relationship is flattened by higher incomes and adaptation to local climate. Using a revealed-preference approach to recover unobserved adaptation costs, we estimate that the mean global increase in mortality risk due to climate change, accounting for adaptation benefits and costs, is valued at roughly 3.2% of global GDP in 2100 under a high-emissions scenario. Notably, today’s cold locations are projected to benefit, while today’s poor and hot locations have large projected damages. Finally, our central estimates indicate that the release of an additional ton of CO2 today will cause mortality-related damages of $36.6 under a high-emissions scenario, with an interquartile range accounting for both econometric and climate uncertainty of [−$7.8, $73.0]. These empirically grounded estimates exceed the previous literature’s estimates by an order of magnitude.

A national Clean Electricity Standard that is flexible, technology neutral, and linked to carbon reduction policies in other sectors could go a long way in decarbonizing the power sector. Policymakers could maximize the benefit of this approach by making the standard flexible and technology neutral, linking it to carbon reduction policies in other sectors, and pairing it with complementary policies that facilitate grid integration and directly support technological innovation.