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Knowledge diffusion, endogenous growth, and the costs of global climate policy

Lucas Bretschger, Filippo Lechthaler, Sebastian Rausch and Lin Zhang

European Economic Review, 2017, vol. 93, issue C, 47-72

Abstract: This paper examines the effects of knowledge diffusion on growth and the costs of climate policy. We develop a general equilibrium model with endogenous growth which represents knowledge diffusion between sectors and regions. Knowledge diffusion depends on accessibility and absorptive capacity which we estimate econometrically using patent and citation data. Knowledge diffusion leads to a “greening” of economies boosting productivity of “clean” carbon-extensive sectors. Knowledge diffusion lowers the costs of global climate policy by about 90% for emerging countries (China) and 20% for developed regions (Europe and USA), depending on the substitutability between different knowledge types.

Keywords: Climate policy; Endogenous growth; Knowledge diffusion; General equilibrium modeling (search for similar items in EconPapers)
JEL-codes: O33 O44 Q55 C68 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Knowledge Diffusion, Endogenous Growth, and the Costs of Global Climate Policy (2015) Downloads
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