Arbeitspapier
Knowing the Damages is not Enough: The General Equilibrium Impacts of Climate Change
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.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 5862
- Classification
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Wirtschaft
One, Two, and Multisector Growth Models
Environment and Growth
Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Industrialization; Manufacturing and Service Industries; Choice of Technology
Climate; Natural Disasters and Their Management; Global Warming
Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- Subject
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dual economy
adaptation
multi-sector growth model
general equilibrium
factor income
distribution
- Event
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Geistige Schöpfung
- (who)
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Kalkuhl, Matthias
Edenhofer, Ottmar
- Event
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Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
-
2016
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Kalkuhl, Matthias
- Edenhofer, Ottmar
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2016
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