Kyle Meng (UC Santa Barbara) Spatial Correlation, Trade, and Inequality: Evidence from the Global Climate

Organised by Section Economics

Tue 14 September 2021 16:00 to 17:00

Venue Online (Zoom)

This paper shows that greater global spatial correlation of productivities can increase cross- country welfare dispersion by increasing the correlation between a country’s productivity and its gains from trade. We validate this prediction using a global climatic phenomenon as a natural experiment. We find that gains from trade in cereals over the last half-century were larger for more productive countries and smaller for less productive countries when cereal productivity was more spatially correlated. Incorporating this role for spatial interdependence into a projection of climate-change impacts raises projected international inequality, with higher welfare losses across most of Africa.

This special seminar is co-organized with Tilburg University.

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