Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207195 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7804
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We develop a multi-sector structural trade model with emissions from production and a con- stant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we find that a US withdrawal would eliminate a third of the world emissions reduction (25.7% direct effect and 7% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 19.4% (8.2% direct effect and 11.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.
Subjects: 
climate change
international trade
carbon leakage
fossil fuel supply
JEL: 
F14
F18
Q56
Document Type: 
Working Paper
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