CERNA Research Seminar with Jeanne Astier (CREST – Polytechnique), Geoffrey Barrows (CREST – Polytechnique), Raphael Calel (Georgetown U)

Quantifying Climate Damages When Regions Trade: A Structural Gravity Approach

(joint with Jeanne Astier (CREST – Polytechnique), Geoffrey Barrows (CREST – Polytechnique), Raphael Calel (Georgetown U)

This paper presents a method for estimating treatment effects of local climate shocks when regions trade with each other. Because of spillovers induced by trade flows, comparing the evolution of outcomes between pre-shock and post-shock periods in regions exposed versus unexposed to local shocks leads to a biased estimate of treatment effect. We model these across-region dependencies using standard assumptions from international trade theory. We use our model-consistent estimation strategy to revisit the literature on the evaluation of impacts from climate change onto country-sector gross output using year-to-year variation in temperature and counterfactual scenarios where the observed warming from 1991 to 2019 would not have occurred or considering future warming predictions.

There will be an opportunity to schedule individual meetings and/or join lunch/dinner with Hélène before the seminar.

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