Research
Working Papers
Greening Ricardo: Environmental Comparative Advantage and the Environmental Gains From Trade
M. Le Moigne, S. Lepot, R. Ossa, M. Ritel, D. Simon, 2024
Abstract: We show that climate policy can unlock large environmental gains from trade by inducing countries to specialize according to their environmental comparative advantage. We make this point by exploring the effects of a carbon tax in a quantitative trade model. Our main result is that the environmental gains from trade account for over one-third of the total reduction in greenhouse gas emissions brought about by the carbon tax. This finding holds for a wide range of carbon tax rates and coverages.
The Distributional Effects of Carbon Pricing: A Global View of Common but Differentiated Responsibilities
M. Le Moigne, S. Lepot, M. Ritel, D. Simon 2024
Abstract: We use a quantitative international trade model with climate policies to explore the idea of Common but Differentiated Responsibilities (CBDR), a leading principle of climate action. The principle recognizes that low- and middle-income countries are most affected by climate change despite their lower contributions to its causes. We ask what are the consequences for global equity of policies that ignore CBDR and explore the efficiency and feasibility of various policy schemes that comply with it. Our analysis delivers three main results. First, we document that efficient climate policies that ignore CBDR strongly exacerbate between-country inequality. Second, we show that equity can still be achieved with efficient climate policies when they are paired with realistic international transfers that either equalize the costs of carbon taxation or account for historical emission patterns with both types having a modest impact on the population of high- income countries. Third, we show that carbon taxation schemes that rely on heterogeneous pricing with lower taxes for low and middle-income countries do not necessarily lead to fairer outcomes.
Watch my coauthor Marcos presenting the paper in September 2024: Link to the recording (from minute 53:50)
To Beef or Not To Beef: Trade, Meat, and the Environment
D. Simon, 2024
Abstract: How can food consumption choice reduce emissions? I estimate a demand model using purchasing data of meat and other protein rich products from a European retailer and combine it with data on production and transport emissions. In counterfactual exercises, I analyze the reaction of consumers to food consumption policies. I find that buying local only decreases emissions by around 2% compared to the status quo. Vegetarian scenarios lead to the largest decrease in emissions of more than 20%. Pigouvian taxes lead to emissions reductions of 8-21%. These findings underscore the role of consumer choices in shaping food-related emissions.
Consumption Slowdown after the Great Recession
D. Simon, V. Sulaja, 2022
Abstract: The consumption growth in the US has considerably decreased since the last financial crisis. We argue that this happened due to controls imposed on banks that were facing foreclosure issues. Those banks that faced foreclosure issues have faced controls by government institutions, which increased their costs and decreased their supply of mortgage loans. As a result, counties more exposed to controlled banks faced a slower recovery of house prices and therefore wealth. Using data on employment and consumption we argue that it is the wealth effect originating from bank controls that decreased consumption growth. Banks decrease their mortgage loan origination by issuing lower number of loans and not by decreasing the average amount of loan.
Work in Progress
Trump Tariffs and Emissions
M. Ritel, D. Simon 2024
Research Question: What is the effect of Trump’s proposed trade policy for welfare and emissions in and outside the US?