The latitude gradient in comparative development is a striking fact: as one moves away from the equator, economic activity rises. While this regularity is well known, it is not well understood. In the present paper we take a step towards unpacking this gradient. Perhaps the strongest correlate with (absolute) latitude is the intensity of ultraviolet radiation (UV-R), which epidemiological research has shown to be a cause of a wide range of diseases. We establish that UV-R is strongly and negatively correlated with economic activity, both across and within countries. We propose, and test, a mechanism that links UV-R to current income differences via the impact of disease ecology on the timing of the take-off to sustained growth.

This study focuses on electric utilities in the United States to consider two related issues. First, the study tests for asymmetric price reactions to positive and negative earnings surprises (ES). Second, the study associates policy differences across jurisdictions with variations in the cash flow effects of positive and negative ES and then uses the framework to consider variations in price responses across regulatory climates. In the same context, the study investigates the effects of a utility's abnormal profits on the asymmetry of price reactions to positve and negative ES. The empirical predictions are motivated by the disparity between the principles and practices that underlie cost recovery for the utilities and the uneven effects of the cost‐recovery practies on the cash flows associated with positve and negative ES. The results show that the sign of ES and the climate in which a utility operates are related to the size of price reactions to ES. Furthermore, a utility's abnormal profit status has significant effects on the size of price reactions to ES. Only a modest price response asymmetry is indicated for manufacturing firms.

This paper takes as given that (i) the burning of fossil fuel increases the carbon dioxide content in the atmosphere, which (ii) in turn leads to global heating and global climate change of a

An effective climate change treaty must promote the joint supply of two global public goods: climate change mitigation and knowledge of new technologies that can lower mitigation costs. R&D is especially needed to bring about substantial, long-term reductions in atmospheric concentrations of greenhouse gases, for this will require the development and diffusion of revolutionary, “breakthrough ” technologies (Martin I. Hoffert et al. 2002). In principle, such an outcome could be realized by the Kyoto Protocol approach, if that agreement were strengthened over time. However, that response may be inadequate (Kyoto makes no provision for R&D)—and, as I shall demonstrate, unlikely to succeed in any event. Can a treaty system relying directly on targeted R&D and the adoption of breakthrough technologies perform better in this same setting of anarchic international relations? I shall show that, as a general rule, the answer is no. Essentially, the same forces that undermine Kyoto also challenge the R&D and technology approach. There is one exception to this rule: R&D leading to breakthrough technologies exhibiting increasing returns can improve dramatically on the Kyoto approach, even when these technologies are otherwise inferior to the alternatives available. This suggests that our approach to treaty design should be strategic. 2I. The Kyoto Approach Begin by considering the abatement decisions of countries in the absence of a multilateral agreement. Let qi denote country i’s abatement and let Q denote aggregate abatement; with N countries, Q = qi i=1 N Â. Finally, let country i’s payoff be given by p i = bQ- c qi

We analyze how the materialization of physical climate risk in the institutional investors’ portfolios spurs a propagation effect on the information content of stock prices. Institutional investors with a relatively high portfolio exposure to natural disasters divest from disaster-hit stocks, decrease the trading intensity in non-hit stocks, and their trading decisions predict low medium-term returns. At the firm-level, institutional investors propagate the effects of disasters to non-hit stocks through reduced incorporation of firm-specific information, especially when the stocks represent a low portfolio weight. Combined, these results suggest that natural disasters trigger a rational reallocation of information-processing resources by institutional investors.

We document that localized policies aimed at mitigating climate risk can have unintended consequences due to regulatory arbitrage by firms. Using a difference-in-differences framework to study the impact of the California cap-and-trade program with U.S. plant-level data, we show that financially constrained firms shift emissions and output from California to other states where they have similar plants that are underutilized. By contrast, unconstrained firms do not make such adjustments. Overall, unconstrained firms do not reduce their total emissions, whereas constrained firms increase their total emissions after the cap-and-trade rule, undermining the effectiveness of the policy.

Regional migration is analyzed utilizing a model that develops a system of urban areas. The areas differ in their endowment of a site-specific factor—climate is used as the example. The effects of differences in tax rates and technology are determined in a model where the price of housing is endogenous. Compensation for an inferior climate occurs through regional differences in income levels or the price of housing, dependent on the manner in which climate affects production or consumption. The market distribution of households is found to be suboptimal in cases where utility is derived directly from the consumption of climate. The locational choice of households is determined by a variety of factors. Recent contributions concentrating on climatic variations are Graves [1979], Graves and Linneman [1979], and Izraeli [1973]. A problem with the migration literature has been the lack of specifi-cation of a model that contains a system of urbanized areas. The model should determine the equilibrium size of urban areas. The migration flow results from the adjustment of the stock of population to changes

We study the Markov perfect equilibrium in a dynamic game where agents have non-constant time preference, decentralized households determine aggregate savings, and a planner chooses climate policy. The article is the first to solve this problem with general discounting and general functional forms. With time-inconsistent preferences, a commitment device that allows a planner to choose climate policy for multiple periods is potentially very valuable. Nevertheless, our quantitative results show that while a permanent commitment device would be very valuable, the ability to commit policy for “only” 100 years adds less than 2% to the value of climate policy without commitment. We solve a log-linear version of the model analytically, generating a formula for the optimal carbon tax that includes the formula in Golosov et al. (2014, Econometrica, 82, 41–88) as a special case. More importantly, we develop new algorithms to solve the general game numerically. Convex damages lead to strategic interactions across generations of planners that lower the optimal carbon tax by 45% relative to the scenario without strategic interactions.

The paper presents a dynamic game where players contribute to a public bad, invest in technologies, and write incomplete contracts. Despite the n + 1 stocks in the model, the analysis is tractable and the symmetric Markov perfect equilibrium unique. If only the contribution levels are contractible, then investments are suboptimally small if the contract is short term or close to its expiration date. To encourage investments, the optimal contract is more ambitious if it is short term, and it is tougher to satisfy close to its expiration date and for players with small investment costs. If renegotiation is possible, such an incomplete contract implements the first-best. The framework helps to analyse emissions, investments, and international environmental agreements, and the results have important lessons for how to design a climate treaty.