Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/141839
Authors: 
Kalkuhl, Matthias
Edenhofer, Ottmar
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5862
Abstract: 
We show that economies may exhibit a strong endogenous macroeconomic adaptation response to climate change. If climate change induces a structural change to the more productive sector, economies can benefit from climate change though productivities in both sectors are reduced. If climate change causes structural shifts towards the less productive sector, damages are exacerbated by the intersectoral reallocation of labor and intertemporal reallocation of capital. We further assess impacts on labor movement and income distribution. We apply our analytical findings to reasonable parameters for a large set of real-world economies and find that the multiplier effect of climate change due to general equilibrium effects is sizable as it ranges between 50 and 250 percent. Thus, existing assessments of climate change impacts can be severely biased.
Subjects: 
dual economy
adaptation
multi-sector growth model
general equilibrium
factor income
distribution
JEL: 
O41
O44
O13
O14
Q54
Q56
Document Type: 
Working Paper

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